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94th Congress 
2d Session 



JOINT COMMITTEE PRINT 



CONFLICT OF INTEREST AND THE 
CONDOR MISSILE PROGRAM 



REPORT 

BY THE 

SUBCOMMITTEE ON INVESTIGATIONS 

OF THE 

JOINT COMMITTEE ON 

DEFENSE PRODUCTION 

CONGRESS OP THE UNITED STATES 

TOGETHER WITH 

MINORITY VIEWS 







SEPTEMBER 1976 



*y/////* 



/ 



77-936 O 



U.S. GOVERNMENT PRINTING OFFICE 
WASHINGTON : 1976 



For sale by the Superintendent of Documents, U.S. Government Printing Office 
Washington, D.C. 20402 - Price $1.95 



JOINT COMMITTEE ON DEFENSE PRODUCTION 

(Created Pursuant to Public Law 774, 81st Congress) 
LEONOR K. SULLIVAN, Missouri, Chairman 
WILLIAM PROXMIRE, Wisconsin, Vice Chairman 
PARREN J. MITCHELL, Maryland JOHN SPARKMAN, Alabama 

DAVID W. EVANS, Indiana HARRISON A. WILLIAMS, Jr., New Jersey 

GARRY BROWN, Miphigan JOHN TOWER, Texas 

ALBERT W. JOHNSON, Pennsylvania EDWARD W. BROOKE, Massachusetts 

William H. Kincade, Staff Director 
Rhett B. Dawson, Minority Counsel 
Leon S. Reed, Professional Staff 

Robert Terzian, Counsel 

Robert Gray, Professional Staff 

Martha Braddock, Chief Clerk 

Lory Trapp, Secretary 



SUBCOMMITTEE ON INVESTIGATIONS 
WILLIAM PROXMIRE, Wisconsin, Chairman 
PARREN J. MITCHELL, Maryland JOHN TOWER, T^xas 

DAVID W. EVANS, Indiana ALBERT W. JOHNSON, Pennsylvania 

(ID 



LETTER OF TRANSMITTAL 



September 1976. 
To Members of the Joint Committee on Defense Production 

This report represents the results of the inquiry conducted by the 
Subcommittee on Investigations into allegations of conflict of interest 
in connection with the decision to produce the Navy's CONDOR air- 
to-surface missile system. 

This review was requested of the committee by Senator Thomas 
Eagleton following allegations of conflict of interest in the CONDOR 
case and because of the Joint Committee's prior efforts in this area, 
stemming from its oversight of defense contracting and procurement 
activities. 

In the course of its five-month inquiry, the subcommittee reviewed 
well over 250 separate reports, messages, memoranda, plans, brief- 
ings, position papers, studies and correspondence covering an eight- 
year period. In addition, the subcommittee took testimony from nine 
witnesses in six days of interviews held in Executive Session, for a 
total of 408 pages of testimony. 

The subcommittee and the staff have carried out an intensive and 
impartial inquiry of all facets of the CONDOR production decisions 
and have spared no effort to prepare a thorough and professional re- 
view of their findings. 

I believe the summary report contained herein speaks for itself. I 
call your attention in particular to the recommendations developed 
by the subcommittee. 

William Proxmire, Vice Chairman, 
Chairman, Subcommittee on Investigations. 

(in) 



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CONTENTS 



Page 
Letter of transmittal in 

Report of the Subcommittee 

I. INTRODUCTION 1 

Background of inquiry 1 

Conflict of interest 2 

Perspective of subcommittee 4 

II. THE WEAPONS ACQUISITION PROCESS 5 

Defense Department review of major systems acquisition 5 

History of the CONDOR missile program 9 

III. THE CONDOR DECISION SEQUENCE 15 

1974 efforts to preserve CONDOR in the Defense budget 15 

CONDOR Operational Evaluation (OPEVAL), December 1974- 

September 1975 37 

DSARC III Milestone and preparation, August-September 1975__ 45 

DSARC deliberations 56 

CONDOR action memorandum, October-November 1975 59 

1975 efforts to appeal OMB cancellation of CONDOR 82 

The Principia study 86 

DSARC IIIB Milestone, June 1976 93 

IV. CONFLICT OF INTEREST IMPLICATIONS OF THE CONDOR 

DECISION 103 

Contractor's position 103 

The Navy's position 104 

The DSARC principals 105 

Directorate, Defense research and engineering principals 107 

Influencing procurement officials 113 

Summary 115 

V. FINDINGS AND RECOMMENDATIONS 118 

Committee findings 118 

Committee recommendations 119 

MINORITY VIEWS 121 

Appendices 

1. DoD general counsel memorandum of March 16, 1976 A-l 

2. Secretary of Defense letter of March 16, 1976 A-3 

3. Secretary of Defense letter of June 7, 1976 A-5 

4. DoD directive 5500.7 (Standards of Conduct) A-7 

5. Deputy Secretary of Defense memorandum of January 15, 1975 A-ll 

6. Statement by Deputy Secretary of Defense William P. Clements, Jr., 

before the National Security Industrial Association, October 9, 1975 

(excerpt) A-13 

7. Statement of Secretary of Defense Donald Rumsfeld on Standards of 

Conduct, April 8, 1976 A-15 

8. DoD directive 7000.1 (resource management systems of the Depart- 

ment of Defense) A-22 

9. DoD directive 5000.2 (the Decision Coordinating Paper and the De- 

fense Systems Acquisition Review Council) A-28 

10. DoD directive 5000.26 (Defense Systems Acquisition Review Council) _ A— 42 

11. DoD directive 5000.1 (acquisition of major Defense systems) A-52 

12. Deputy Secretary of Defense memorandum of May 17, 1976 (subject: 

Designation as DoD Acquisition Executive) A-60 

13. Deputy Secretary of Defense memorandum of May 17, 1976 (subject: 

Defense systems acquisition process) A-61 

(V) 



I. INTRODUCTION 



BACKGROUND OF INQUIRY 

In March 1976, Secretary of Defense Donald Rumsfeld 
reprimanded Dr. Malcolm Currie, Director of Defense Re- 
search and Engineering, for violation of the Department 
of Defense Directive 5500.7 relating to standards of con- 
duct as a result of a visit Dr. Currie made to a residence 
owned by a defense contractor, Rockwell International, at 
Bimini in the Bahamas, over Labor Day weekend in 1975. 
(See Appendix 1) 

In a letter to Dr. Currie dated March 16th, however, 
Secretary Rumsfeld stated, "I understand that there is 
no evidence of any improper influence as a result of 
your activities on the weekend in question." (See 
Appendix 2) 

Subsequently, allegations were made that Dr. Currie 
had compromised the integrity of his position and that a 
conflict of interest situation did exist in consequence of 
his participation in the production decision on the Navy's 
CONDOR air-to-surface missile system following his visit 
at Bimini with Mr. Robert N. Anderson, President and Chief 
Executive Officer of Rockwell International, the prime con- 
tractor on the CONDOR system. 

Later, in a letter to Senator Thomas Eagleton address- 
ing these allegations, Secretary Rumsfeld wrote: 

Dr. Currie was, in fact, the architect of 
the plan accepted by Mr. Clements not to approve 
production of CONDOR as proposed by the Navy, but 
rather to delay production pending further tests 
related to missile reliability and to limit Govern- 
ment liability to $10 million during this phase... 
Dr. Currie, therefore, acted contrary to the busi- 
ness interests of Rockwell International in his 
action. 

On April 6, 1976, in remarks on the floor of the Senate, 
Senator Eagleton cited the allegations and requested Senator 
William Proxmire, Vice Chairman of the Joint Committee on 
Defense Production and Chairman of its Subcommittee on Inves- 
tigations, to examine the allegations to determine whether a 
conflict of interest was involved. Senator Proxmire re- 
sponded that an inquiry seemed warranted and that, if under- 
taken, it would be "conducted in a highly professional, 
unbiased manner." 

A week later, Senator Proxmire directed the Joint Committee 
staff to initiate the inquiry and expressed his intention that it 
should be a "thorough, fair, and impartial review of the matter. ** 

(1) 



CONFLICT OF INTEREST 



A conflict of interest arises when a government employee 
is placed in a position where he must balance his official gov- 
ernment duties with his outside interests. In a 1960 study which 
is still the landmark for interpretation of conflict of interest 
principles, the Association of the Bar of the City of New York 
stated : 

The government contracting officer who accepts 
money from a contractor in exchange for granting 
him a contract puts himself in an extreme posi- 
tion of conflict between his official duty and 
personal economic interest. [But] we have a 
specialized name for this offense, and... it is 
beyond the scope of this book. This offense is 
bribery... It assumes a quid pro quo; the official 
is to do something in his official character in 
return for the payment. 

But now assume that the same contracting of- 
ficer simply receives a large gift from the con- 
tractor. There is no agreement or discussion 
about any contract, and the officer in fact does 
not give the contract to the donor. If this act 
is to be forbidden, it cannot be on a theory of 
theft or bribery. It must be on the theory that 
the conflict of interest set up by the gift is likely to 
lead to a warping of the official's judgment 3 or is likely 
to create the appearance of improper influence. If the 
official were not an official, the gift would be 
unexceptionable under federal law. The wrong 
arises entirely out of the undesirably inconsistent 
position of the official, first in his relationship 
to the outside party, and second in his relationship 
to his federal employer. The offense is an offense 
arising out of special status. The whole is greater 
than the sum of the parts: a subjectively innocent 
official performing an innocent act can combine to 
constitute an offense against conflict of interest 
principles . 

Regulation of conflicts of interest is regulation 
of evil before the event; it is regulation against potential 
harm. These regulations are in essence derived, or 
secondary - one remove away from the ultimate mis- 
conduct feared. The bribe is forbidden because it 
subverts the official's judgment; the gift is forbidden 
because it may have this effect, and because it looks to others 
as though it does have this effect. This potential or 
projective quality of conflict of interest rules is 
peculiar and important. We are not accustomed 



to dealing with law of this kind. It is as 
though we were trying to prevent people from 
acting in a manner that may lead them to rob 
a bank, or in a manner that looks to others 
like bank robbery... [emphasis added] 

Perhaps most importantly, the Bar Association found that: 

A conflict of interest does not necessarily 
presuppose that action by the official favoring 
one of these interests will be prejudicial to 
the other, nor that the official will in fact 
resolve the conflict to his own personal ad- 
vantage rather than the government's. If a man 
is in a position of conflicting interests s he is subject 
to temptation however he resolves the issue. Regulation 
of conflicts of interest seeks to prevent situations of 
temptation from arising. [emphasis added] 

The Bar Association gave an example of what it meant by this : 

An Internal Revenue agent auditing his own 
tax return would offer a simple illustration of 
such a conflict of interest. Perhaps the agent's 
personal interest in the matter would not affect 
his discharge of this official duty; but the ex- 
perience of centuries indicates that the contrary 
is more likely, and that affairs should be so ar- 
ranged as to prevent a man from being put in such 
an equivocal position. 

Conflict of interest law, as opposed to conflict of interest 
principles, has concentrated on three substantive limitations on 
persons currently employed by the federal government: assisting 
outsiders in dealings with the government, self -dealing , and 
compensation by outsiders for government service. 

In addition, there is a wide body of agency regulations 
which specify minimum standards of conduct expected of all 
agency employees. In regard to employees of the Department of 
Defense, regulations require adherence to the highest stand- 
ards of ethical conduct and prohibit preferential treatment for 
any person or behavior which might result in the appearance of 
losing complete impartiality of independence. (See Appendix 4 ) 
This report considers whether there have been any activities 
that might create such an appearance. 



Standards of conduct, however, remained an issue drawing 
relatively little concern for the department until 1975. In 
January of that year, Deputy Secretary William Clements sent 
a memorandum to senior military officials reminding them of 
these provisions. (See Appendix 5 ) In October 1975, after 
publicity regarding the entertainment of defense officials, 
the department took additional action. (See Appendices 6 
and 7) 

PERSPECTIVE OF THE SUBCOMMITTEE 

In conducting its inquiry, the subcommittee was not con- 
cerned with judging the merits of the CONDOR missile system or 
with arbitrating the controversy that surrounded it. Nor did 
the subcommittee attempt to make a judgment about the Navy's 
longstanding requirement for a stand-off, air-to-surface mis- 
sile capable of striking heavily defended, high-value targets. 
Rather, the subcommittee's concerns were restricted solely to 
the issue of whether or not there was any conflict of interest 
involved in the lengthy decision process through which the 
CONDOR program was reviewed. 

The subcommittee, therefore, set about examining six epi- 
sodes in the recent history of CONDOR'S development: four 
crucial decision points and two evaluation efforts that bore 
directly on these decision points. There were: (1) the 1974 
actions to 'reclama' (or appeal) Congressional and Secretary 
of Defense initiatives to restrain funding for the program; 
(2) the initial CONDOR operational evaluation conducted between 
December 1974 and August 1975 and criticism directed at that 
effort; (3) the DSARC III milestone at the end of September 
1975 and the actions in the following month aimed at preparing 
a recommended course of action for the Secretary of Defense; 
(4) the actions in November and December 1975 to repeal a 
recommendation by the Office of Management and Budget that the 
President cancel the CONDOR program for cost-effectiveness and 
budgetary reasons; (5) the study of the vulnerability of the 
CONDOR missile to enemy defenses performed in early 1976 by a 
consulting firm known as Principia, Inc. under a contract from 
the Navy; and (6) the second DSARC III milestone occurring in 
June 1976. 



II. THE WEAPONS ACQUISITION PROCESS 



DEFENSE DEPARTMENT REVIEW OF MAJOR SYSTEMS ACQUISITION 

The Office of the Secretary of Defense (OSD) has two 
formal systems for screening the weapons development and 
production programs of the military departments. One is 
aimed primarily at financial or resource issues and the 
other addresses mainly technological matters although 
both intersect with and impact on each other. 

Primary responsibility for financial and budgetary 
questions resides with the Assistant Secretary of Defense 
(Comptroller) . It is he who issues the directives and 
other guidance relating to resource management systems, 
including the Planning, Programming and Budgeting System 
(PPBS) . (See Appendix 8 ) 

Primary responsibility for technological considerations 
lies with the Director of Defense Research and Engineering 
(DDR§E) . This responsibility includes issuance of directives 
and guidance pertaining to the Defense Systems Acquisition 
Review Council (DSARC) and the Decision Coordinating Papers 
(DCPs) , which are prepared for the acquisition of every major 
defense system. (See Appendices 9-11 ) 

Both of these systems figure prominently in the decisions 
on the CONDOR program. 

Planning, Programming and Budgeting System . The PPBS 
was first instituted in tne 1960s as a means of relating sep- 
arate service resource requirements to each other, to long- 
range defense objectives and plans, and to the President's 
annual budget request. PPBS was adopted in the Department of 
Defense in part because of criticism during the 1950s that 
there was no comprehensive method for making choices among 
service programs competing for the same dollars and that the 
Secretary of Defense had no adequate tools for managing the 
totality and the parts of the department's budget. 

Each year the Five Year Defense Plan is amended and its 
requirements are expressed in terms of specific programs for 
manpower, weapon systems and support equipment needed by each 
service. Decisions are made regarding relative priorities 
within and between the services for specific missions and ob- 
jectives. Programs are evaluated similarly in terms of their 
priority and the availability of budget resources to carry 
them out. 

(5) 



The process by which this revision is carried out and 
by which priorities are related to budgetary constraints 
involves a continuous flow of information and analysis 
among the many elements of the Department of Defense. This 
flow of information is standardized through the use of a 
series of documents, including Program Objective Memoranda 
(POM) , Program Change Requests (PCR) , Program/Budget Decisions 
(PBD) , Program Decision Memoranda (PDM) , and Program Change 
Decisions (PCD). The documents stem from plans and objectives 
developed by the Joint Chiefs of Staff and from fiscal guid- 
ance supplied by the Secretary of Defense. 

Military departments and defense agencies submit Program 
Objective Memoranda and Program Change Requests to the Secre- 
tary of Defense. He in turn responds to their proposals through 
Program Decision Memoranda, Program Change Decisions, and 
Program/Budget Decisions. 

The most significant output of the PPBS is the series of 
decisions that constitute the Department of Defense budget 
submitted to the President by the Secretary of Defense in the 
autumn of each year. 

The Defense System Acquisition Review Council . The DSARC 
is composed of the top civilian officials of the Defense Depart- 
ment below the level of the Deputy Secretary who have procure- 
ment responsibilities: Director, Defense Research and Engineer- 
ing (DDR§E) ; Assistant Secretary of Defense (Comptroller) [ASD(C) ] 
Assistant Secretary of Defense (Installations and Logistics) 
[ASD(I§L)]; and the Assistant Secretary of Defense (Program Analy- 
sis and Evaluation) [ASD (PA§E)] , a position which has recently 
been abolished. 

In the words of one observer: "The function of the DSARC 
is to review a major program's progress at key points in order 
to retain control over it at the OSD level." It was established 
in the 1970s by then Deputy Secretary of Defense David Packard, 
who explained "...in defense procurement, we have a real mess 
on our hands... the fact is that there has been bad management 
of many defense programs in the past." 

The aim of the DSARC is to review service weapon programs 
in at least three vital stages to determine whether the program 
is ready to advance to the next stage and whether it is being 
carefully managed by the service sponsor. The three major mile- 
stones provided for in the DSARC review process are: (1) program 
initiation and validation; (2) full-scale engineering develop- 
ment; and (3) production and deployment. If a program fails 
to pass any of these scheduled milestones, it will, in theory, 
be held back pending resolution of any difficulties disclosed, 
altered so as to overcome these difficulties or cancelled. 



The intended outcome of the DSARC process is a series of 
independent OSD decisions or recommendations concerning the 
justification, management and readiness of specific service 
weapons acquisition programs. 

Recent Changes in OSD Review Process . During 1976, sev- 
eral changes were implemented or proposed which will have a 
significant impact on the ability of the Office of the Secre- 
tary of Defense to monitor and review major service procurement 
programs. (See Appendices 12-13 ) 

(1) Early in 1976, Deputy Secretary of Defense William 
P. Clements, Jr., directed that the monitoring and review of 

a number of weapon systems (including CONDOR) which had passed 
DSARC milestone III be turned over to their service sponsors. 
This means that during production and deployment phases, when 
weapons systems are subject to high cost growth due to expen- 
sive engineering design changes, these programs will not be 
subject to OSD review but rather to review only by their ser- 
vice advocates. This change tends to undermine former Deputy 
Secretary Packard's goal of conducting vigorous reviews in 
order to eliminate "...the many 'nice' or 'desirable' features 
which so often creep into these systems as they proceed through 
development and production." 

(2) In May Deputy Secretary Clements created a single 
Acquisitions Executive for the entire Department of Defense, 
in accordance with OMB Circular A-109, which directed such 
designation for all agencies of the government. To this 
post, Mr. Clements appointed Dr. Currie, the Director of 
Defense Research and Engineering, thereby giving him coord- 
ination responsibilities for, not only the entire Research, 
Development, Test and Evaluation (RDT§E) budget of the De- 
fense Department (currently at about $11 billion), but of 
the department's procurement budget, currently just under 
$30 billion. At the same time, Mr. Clements directed that 
Dr. Currie would henceforth serve as the Permanent Chairman 
of the DSARC, although the DSARC directive provides that the 
Assistant Secretary of Defense for Installations and Logistics 
will chair the production and deployment milestone review 
because of his greater involvement in production and deploy- 
ment issues. (Subsequently, during the summer, Deputy Secre- 
tary Clements was himself appointed to this post as Acqui- 
sitions Executive in place of Dr. Currie.) 

(3) Also in May, the post of Assistant Secretary of 
Defense for Program Analysis and Evaluation was abolished 
and the Program Analysis and Evaluation staff was reorgan- 
ized as a lower-level office, called the Office of Planning 
and Evaluation. The program analysis and evaluation 
staff (formerly the systems analysis staff) has, since the 



early 1960s, been the most consistent critic within OSD 
of service weapons development programs, usually on the 
grounds of their poor cost-effectiveness qualities. 
Mr. Leonard Sullivan, former Assistant Secretary for 
Program Analysis and Evaluation, described the institu- 
tional role of his office to the subcommittee as follows: 
"We are the resident skeptics. We are sort of paid to 
raise opposing views." 

The impact of this organizational change is twofold: 
(a) it reduces the access and prestige of the program 
evaluation function within the Office of the Secretary 
of Defense, and (b) it downgrades the office traditionally 
most concerned with the cost-effectiveness of major systems 
development programs. 

(4) During the summer, Defense Secretary Rumsfeld 
turned down an additional proposal that would have curtailed 
the responsibilities of the Assistant Secretary of Defense 
for Installations and Logistics and merged procurement 
elements of that office into the Directorate of Defense 
Research and Engineering. This action, if taken, would 
have further concentrated the power of the Director of 
Defense Research and Engineering over all phases of weapons 
acquisition, from exploratory research to full deployment 
of the weapon. 

The thrust of these changes and proposals was consis- 
tently in the same direction- to reduce the ability of the 
Secretary of Defense to obtain independent judgments about 
weapons programs and vigorously to review these programs 
while their service sponsors carried them out. By giving 
up OSD-level review of systems at the critical production 
and deployment phase and returning it to the services, the 
Office of the Secretary stands to lose control over the 
most costly phase of weapons procurement. By downgrading 
the institutional position of the Office of the Assistant 
Secretary for Program Analysis and Evaluation, the ability 
of that office to represent its views on the crucial cost- 
effectiveness issues to the Secretary and Deputy Secre- 
tary on a equal basis with the other DSARC members is 
diminished. 



HISTORY OF THE CONDOR MISSILE PROGRAM 

The Navy's original requirement for a stand-off (long- 
range) , air-to-surface guided missile capable of destroying 
heavily defended, high-value targets was first established 
in 1962. The basis of the need for a long-range or stand- 
off missile was that this feature would allow pilots to 
stay clear of enemy defenses and thus save lives and air- 
craft. 

Development of the missile began in 1965 and the prime 
contractor, Rockwell International, was selected in the 
following year after a competition with Northrop Corporation. 
A prototype of the television-guided missile was first launched 
in October of 1967. 

A year later, however, the program encountered one of 
the first of the many termination efforts it was to endure 
when the Assistant Secretary of Defense for Systems Analysis 
recommended to then Deputy Defense Secretary Paul Nitze 
(also a former Secretary of the Navy) that the program be 
cancelled because of cost increases, program delays, advances 
in dealing with enemy air defenses around high-value targets, 
concern about the warhead size, and the development of alter- 
native weapon systems. 

Experience in the air war in Southeast Asia had convinced 
the Navy of the need for a weapon like CONDOR and development 
was permitted to continue, despite Nitze 's reservations. Still 
further delays occurred, however, in the course of efforts to 
develop a liquid fuel motor, an approach that was finally 
abandoned. 

The complete weapon system consists of the missile itself 
(with solid propellant motors, flight control system, data link 
electro-optical (TV) target acquisition system, and warhead), a 
pod to be mounted on the launching aircraft for controlling and 
testing the missile, and special test equipment for checking 
the missile's operational condition before the carrying air- 
craft departs from the aircraft carrier. The Navy considered 
using the CONDOR system with several aircraft but finally chose 
the A-6 attack plane to carry the CONDOR. Use of the A-6, a 
two-place aircraft, would require its two-man crews and main- 
tenance technicians to be trained in the use of the CONDOR 
before it could be operationally deployed. 

In March 1970, the first powered flight of the missile was 
achieved. Later that same year, the General Accounting Office 
issued one of its periodic reports on this and other tactical, 
air-to-ground missiles and concluded that it was less effective 
in performance than the WALLEYE II. The Navy completed its 
flight demonstrations during August of the following year. 



10 



During 1972 and 1973, the Air Force conducted demonstra- 
tions of the missile. At the same time, an effort was under- 
taken to develop a new guidance system for the missile. Al- 
though repeatedly asked to examine the CONDOR for possible 
joint service use, the Air Force decided at this time, as it 
would on all subsequent occasions, that the CONDOR did not 
meet its requirements in terms of range, all-weather capability, 
and warhead size and type, among others. 

In August 1974, the Navy accepted the first pilot pro- 
duction missile and plans were made to conduct an operational 
evaluation of the CONDOR, which began in December of 1974. 

Throughout its development the CONDOR has been the focus 
of considerable skepticism in a number of quarters, including 
the House Appropriations Committee, the General Accounting 
Office, the Office of Management and Budget, and several ele- 
ments of the Office of the Secretary of Defense. 

The skepticism about the CONDOR program was based on a 
number of considerations, which are summarized below: 



Cost Effectiveness . The cost effectiveness of a weapon 
system is determined by a multivariate analysis of a number 
of factors such as the ability of the system to perform its 
mission, the availability of alternative systems at lower or 
higher cost, the urgency of the requirement, the numbers to 
be procured, the nature of the planned deployment of the sys- 
tem, its training and logistics support or maintenance costs 
relative to the cost of similar systems, and the per unit 
and total life-cycle costs of the weapon system. A change in 
one of these variables can have a significant impact on the 
others and, thus, on overall cost effectiveness. A decrease 
in planned procurement, for example, will increase the cost 
of each system per unit and could thereby make an otherwise 
cost effective system unable to compete with alternatives. 

In the case of CONDOR, the long, drawn-out development 
program adversely affected its cost-effectiveness in two ways. 
First, the costs of the program went up in absolute terms and 
as a result of inflation beginning in the 1970s. The unit cost 
of CONDOR ballooned from $70,000 per copy estimates in the early 
phases of development to a cost of $415,561 per missile in in- 
flated 1976 dollars. Total program cost reached an estimated 
$412.3 million dollars or more in 1975. 

Secondly, during this same period, there was an explosion 
in the technology of tactical weaponry, especially in air-to- 
surface weapons. Several weapons were available to perform 
essentially the same mission as the CONDOR. Among them are the 



11 



Air Force's Electro-Optical Glide Bomb (EOGB) , the WALLEYE II 
missile and the TV-guided MAVERICK missile. In addition, 
equally promising developments in remotely-piloted vehicles 
(RPVs) and longer-range, stand-off missiles, such as the sea- 
and air-launched cruise missiles^suggested that the CONDOR 
might be obsolescent before it could be produced in quantity. 
Several of the current technology systems did not perform 
as well as the CONDOR in its mission, but they were so much 
cheaper to procure that it seemed more cost effective to 
some weapon system analysts to use several of these cheaper 
weapons rather than a single CONDOR. 

It was pointed out, moreover, that the CONDOR'S mis- 
sion was a specialized one. Its primary purpose was to 
destroy heavily defended land targets such as bridges, power 
stations and dams; the secondary mission was against ships. 
In terms of the first objective, the CONDOR was essentially 
a limited-use weapon, since the number of such targets in 
any tactical theatre in range of the Navy's carriers is 
limited. In terms of the second mission, there exist alter- 
natives more capable than the CONDOR, such as the HARPOON. 
For this reason, some experts believed, CONDOR should be 
procured only in small numbers and only a limited number of 
squadrons should be armed with it or aircrews trained in its 
use. 

Production of the CONDOR was also not favored by some 
because of its relatively small warhead size. Although the 
CONDOR'S expected precision accuracy was thought by the Navy 
to overcome this limitation, there continued to be doubt that 
one CONDOR missile would suffice to take out the designated 
targets, as planned. This situation raised an additional 
question of cost-effectiveness, since, if several CONDORs were 
required to destroy a specific target, more would have to be 
procured at CONDOR'S high price. Furthermore, it was estimated 
the necessity for using more CONDORs would require more A-6 
aircraft to sortie and expose themselves to the enemy's inter- 
ceptors or ground defenses. This requirement would likely 
result in the loss of more expensive A-6s, an occurrence which 
the CONDOR was supposedly designed to avoid. Though the CONDOR 
had a range nearly double that of the Air Force's TV-guided 
MAVERICK missile, some experts believed that, when slant range 
was considered, the CONDOR'S stand-off capability was still not 
adequate to place the launch aircraft outside the range of 
hostile surface-to-air missiles (SAMs). 

The CONDOR'S special pod, its unique test equipment, the 
necessity for modifying the A-6 aircraft to carry CONDOR, the 
cost of training maintenance technicians and aircrews, the 
Navy's desire to purchase CONDOR in relatively large quantities 
for fleet-wide deployment and the anticipated costs of later 
design changes were factors which drove many experts to the 
conclusion that, at its price, the CONDOR was not competitive 
with other alternatives, especially during a period of pinched 
procurement budgets. 



77-936 O - 76 



12 



Vulnerability. In the minds of some authorities, the CONDOR 
was excessively vulnerable to enemy defensive measures, though 
its primary mission was to hit heavily defended targets. The 
advantage of CONDOR was that, unlike glide bombs and other alter- 
natives, it could be launched at low altitude, giving it a better 
chance of evading defensive missiles or anti-aircraft fire. 
However, in initial tests conducted by the Navy's Operational 
Test and Evaluation Force, the CONDOR was acquired and tracked 
by the radars associated with defensive surface-to-air missile 
(SAM) systems, suggesting that the CONDOR would require pene- 
tration aids to get to its target. Penetration aids are devices, 
such a decoys or anti -radiation missiles, that either delude or 
suppress enemy defenses. No provision had been made for pene- 
tration aids, though, and their addition to the cost of the 
CONDOR system would have increased its price tag still further, 
in comparison with other systems. Efforts to overcome CONDOR'S 
supposed vulnerability by evasive tactics, it was thought, could 
be easily frustrated by altering target defenses or the defensive 
environment around the target. 



Mission Effectiveness . Mission effectiveness, or operational 
utility, relates to the system's ability to carry out its as- 
signed role--in this instance to acquire, reach and destroy 
hardened targets. It is closely tied to vulnerability in the 
case of CONDOR. Some CONDOR skeptics believed that the system 
was susceptible of enemy jamming, though measures had been 
taken to minimize this possibility. Others considered that 
CONDOR'S problems in acquiring targets during periods of haze 
or low visibility seriously undermined its effectiveness and 
permitted a comparatively simple defense in the form of a smoke- 
screen. Also at issue in the matter of mission effectiveness 
was the question of warhead size, addressed above. 

Operational Suitability . Besides the basic performance of 
its mission, a weapon system is judged on its operational support 
requirements: the necessity for repair and maintenance in the 
field or in maintenance depots, the special parts and test equip- 
ment that are needed to keep it in an operating condition, the 
amount of additional, special training technicians and users 
must receive to be able to deal with the system, its storage 
and shipping requirements, its ability to withstand combat condi- 
tions with a minimum of injury, and the costs of these items. 
Some questions were raised about the operational suitability 
of the CONDOR, in terms of Navy estimates of operations and 
support (0$S) costs . In terms of these costs as related to 
the limited and special mission of the CONDOR, the system appears 
to have met major logistics standards. 



13 



Reliability. For the combat pilot, the reliability of 
his weapons is a major concern, perhaps the crucial one. 
During the operational evaluation of the CONDOR from December 
1974 through the end of the summer 1975, a number of questions 
arose concerning the system's reliability. Questions of this 
kind are normal as pre-production models are tested and the 
contractors* ability to manufacture and assemble systems that 
consistently meet a high and uniform standard of reliability 
is examined and evaluated. Although the CONDOR did not per:" 
in this regard as well as hoped and although both the prime 
contractor and the Navy received some criticism regarding the 
quality assurance program for the CONDOR, it was widely recog- 
nized that the solutions were readily available for the CONDOR'S 
specific technical problems and that, in time, missiles could 
be manufactured in serial production that would meet all of the 
regular reliability standards. 

Nevertheless, during the operational evaluation of the 
CONDOR, the accumulated skepticism concerning the system on 
other grounds turned into open controversy and opposition. The 
reason for this escalation of the debate lay in the impending 
production decision. While a system is in the research and 
development stage, it is difficult to do more than be construc- 
tively critical of it, since every problem encountered during 
R 5 D is theoretically susceptible of solution. As the pro- 
duction decision nears, however, the system must be able to 
overcome any lingering doubts. 

After the production decision is made, the service will 
have to live with the system's defects or incur the greatly 
increased costs that are associated with making engineering 
design changes on a system that has gone into serial production. 

In a report entitled "Cost-Growth in Major Weapons Systems," 
the General Accounting Office has estimated that these engineer- 
ing design changes in the production phase are the largest 
single contributor to cost escalation. Usually, such engineering 
design changes result either from adding new capabilities to a 
basic system or from efforts to remedy defects not eliminated 
during the advanced engineering stage of development. Hastening 
an unready system into production or producing weapons at a rate 
so that lessons learned on initial models cannot readily be in- 
corporated in subsequent models (called "excessive concurrer.: 
can each be an invitation to this kind of cost-growth. 

In the case of the CONDOR, considerations of this kind were 
very much in the forefront of the minds of its detractors, who 
estimated that even the high cost of the "basic CONDOR," as it 
was called, would climb still higher as a variety of options 



14 



were added on, or "retrofitted," at a later date. These options 
included several items that had been sought in the CONDOR pro- 
gram but which had failed of achievement, such as a dual-mode 
seeker permitting an all-weather capability, a day-night cap- 
ability, and an extended-range data link. Other options planned 
for introduction in the basic CONDOR were the substitution of 
a turbo-jet engine for the solid fuel rocket motors ( called the 
Turbo CONDOR), the development of alternative warheads, including 
a nuclear one, and, possibly, penetration aids. 

Under the "modular weapon" concept, which applied to CONDOR, 
a basic weapon is developed and then refinements and additional 
capabilities are added as the technology matures. This pro- 
cedure makes cost increases in the production phase a certainty. 
The position taken by many of the CONDOR skeptics was that, since 
the operational requirement did not appear urgent and because of 
budgetary constraints and other issues (enumerated above) , the 
production of CONDOR should be deferred and the weapon system 
should remain in advanced engineering development until a more 
capable and complete system could be developed. 

The Navy, on the other hand, maintained that it needed the 
weapon in its inventory earlier than deferred development would 
permit and that it would benefit from lessons learned from the 
production of the "basic CONDOR," lessons which could be applied 
to later and improved models. 



III. THE CONDOR DECISION SEQUENCE 

1974 EFFORTS TO PRESERVE CONDOR IN THE DEFENSE BUDGET 

In 1974 there were two reviews that CONDOR had to pass. 
The first was to survive an apparent disposition by the Sec- 
retary of Defense to remove the CONDOR from his Program De- 
cision Memoranda for fiscal year 1976. The second was to 
overcome criticism in the House Appropriations Committee that 
would lead to a recommendation to strike CONDOR from the bud- 
get for fiscal year 1975 in a cost reduction effort. 

At the time of these actions (which did not involve the 
new budget process) the budget cycle began in early May with 
the submission to the Secretary of Defense by the various 
services of their Program Objective Memoranda (POM). These 
are limited by the general outlines of the Five Year Defense 
Plan (FYDP) and supporting financial documents. 

The Office of the Secretary of Defense (OSD) is composed of 
many offices with staffs responsible for various subjects such 
as program analysis and evaluation, financial and budgetary 
review (the Comptroller) and procurement policy (Installations 
and Logistics) . Each of these staffs views the POM and pre- 
pares issue papers on items of interest. These are generally 
disseminated to the services for their comment in the first 
week in July. 

For the balance of July, the Secretary of Defense meets 
with his staff to discuss the issue briefs and to formulate 
an initial Program Decision Memoranda that is issued by the 
end of July. 

By the middle of August, the various services have had a 
chance to evaluate the issue papers and the initial decisions 
of the Secretary of Defense and make their appeals or "reclamas" 
in hope of obtaining Amended Program Decision Memoranda (APDM) 
that are more favorable to their views. 

No later than 1 October, the various services report to 
the OSD, and also to the Office of Management and Budget (OMB), 
their of f icj al-^L-Jget requests in compliance with the APDMs . 

On or a --put 1 October, the OMB advises the Defense Depart- 
ment of the tunding that will be available for defense spending. 
In Novembe - , the budget and financial personnel work with spe- 
cific dollar amounts involved in each program, making the pro- 
gram fit the budget. There are meetings with the OMB, with the 
services and with each of the service comptrollers. Finally, 

(15) 



16 



in late November or early December the budget is sent to the 
Secretary of Defense or his Deputy in the form of a draft 
Program Budget Decision (PBD) . The Secretary of Defense or 
his Deputy then signs and issues the Program Budget Decision 
which is forwarded to the OMB after the various services 
have had their chance to appeal the Secretary's decisions. 
By the middle of December, the budget is completed and sent 
to the White House, where other appeal actions may take place 
before the President submits the budget to Congress in January 
of the next year. 

While this process is taking place, the Congress begins 
its cycle of authorizing and appropriating funds for the fiscal 
year that formerly began on July 1st. The appropriations that 
are made by the Congress are based on the budget request sub- 
mitted in January, rather than the new budget then being de- 
veloped in the Department of Defense for the following fiscal 
year. Thus, the CONDOR missile was simultaneously under review 
for two separate fiscal years. 

OSD Actions . On June 21, 1974, in a classified memorandum 
to the Assistant Secretary of the Navy for Research and Develop- 
ment, Dr. Currie expressed his concerns about the CONDOR pro- 
gram. They included concern for the high unit cost of the sys- 
tem and the additional costs that would be incurred by procuring 
only a limited number of these missiles. 

In addition, Dr. Currie addressed the lack of a low cost 
data package and a multimode seeker, both of which had been 
planned to increase the utility of the system and perhaps make 
it attractive to the Air Force. However, neither of these items 
could be developed and integrated into the system in time for a 
DSARC review, if it was to be held in 1975. 

Therefore, Dr. Currie concluded in a final, unclassified 
paragraph : 

In view of the above, we will consider 
only the basic CONDOR at the DSARC III decision 
point. In order to assist the DSARC to the 
fullest extent during the DSARC III review, the 
Navy should include pertinent information on 
the utility of CONDOR, type of targets, vul- 
nerability of targets and any other rationale 
pertaining to inventory requirements for CONDOR. 

Other elements of the Office of the Secretary of Defense 
(OSD) were to consider that the lack of these . ' other capabil- 
ities was sufficient cause for deferring the production decision 
until they could be obtained and, therefore, for deferring pro- 
curement then scheduled for fiscal years 1976 and i Q 77. Re- 
stricting the DSARC III review only to the basic COI ^OR would, 
on the other hand, preserve the possibility of production and 
procurement as early as fiscal year 1976. 



17 



On July 2, 1974, Leonard Sullivan, Assistant Secretary for 
Program Analysis and Evaluation (PA§E) issued a General Purpose 
Forces Issue Paper listing recommended funding actions for 
service programs and requested service comments from each ser- 
vice on its specific programs. Regarding the CONDOR program, 
the paper recommended deferring procurement of the missile 
that was planned for fiscal years 1976 and 1977 until fiscal 
year 1978, since the missile did not yet possess the ability 
to operate at night or in advejrse weather and its costs remained 
too high. 

Before the week was out, Rockwell officials were in pos- 
session of the issue paper and on July 10th Mr. J.H. Garrett, Jr 
of the Missile Systems Division (MSD) sent a memo to Mr. P.G. 
Paraskos, the divisional vice president in charge of marketing, 
to inform him that earlier work requested by the Navy of Rock- 
well was part of the Navy's effort to respond to this issue 
paper recommendation of deferral. (See Exhibit A-l) 

Mr. Garrett went on to say that the Navy's reason for 
appealing the deferral was that it "...would create a cost 
impact of approximately $27M" (million). He said that he 
would "...follow up on this issue with CNO and OSD personnel 
and keep you advised on additional follow-up action required." 
Notes attached to or penned on this memorandum said "We need 
to strategize how we handle this" and "Has this all been 'strat- 
egized'?." (See Exhibit A-2) 

Nevertheless, on July 29th, the Secretary of Defense 
issued a Program Decision Memorandum (PDM) deferring CONDOR 
production until fiscal year 1978. Mr. Thomas Christie, 
Director, Tactical Air Division in the Office of Planning and 
Evaluation (successor office to the Office of the Assistant 
Secretary for Program Analysis and Evaluation) , testified that 
the deferral recommendation was "...concurred in by the other 
staffs" and that it was based on the need to provide additional 
time to develop a multimode seeker to give the CONDOR a night- 
time and bad weather capability. 

Shortly after issuance of the PDM, Rockwell undertook 
efforts to have the decision repealed, contacting Congressional 
offices, appropriate Navy officials, and two officials in the 
Office of the Secretary of Defense, including Dr. Malcolm 
Currie and his Principal Deputy, Mr. Robert Parker. 

Congressional Actions. During this same period, Congres- 
sional committees were considering the CONDOR program in terms 
of the budget year that had begun on July 1st (fiscal year 1975). 
Though funds were authorized by both the Senate and House Armed 
Services Committees, the House Appropriations Committee took 
strong exception to the CONDOR, recommending termination and 
noting in its report: 



18 



Internal Letter 

Daie July 10, 1974 



TO 

Address 



P. G. Paraskos 
D197-034-B6 




Rockwell International 

no. 8313-457-74 

from J. H. Garrett, Jr. 

Address . Missile Sys terns-Col umbus 
D183 B6 

Phone 2573 



Subjecl 



CONDOR 



Mr. Lynn Sullivan, Assistant Secretary (Program Analysis and Evaluation), 
has prepared a report entitled, "General Purpose Forces Issue Paper ," 
dated 2 July 1974. This document has been released to each service for 
comment and lists specific recommended FY '76 funding actions on individual 
service programs. The services are requested to submit their comments 
regarding same prior' to the document being finalized for DOD budget 
decisions. 

The following quotes the write-up on CONDOR: 

"Defer procurement of the buy of 405 CONDOR missiles planned 
for FY '76 and '77 and resume procurement in FY '78. The cost 
of the CONDOR system is high and can only be used on clear day, 
good visibility conditions. These factors apply but only 
limited procurement should take place until a night adverse 
weather capability is developed and a reduced cost of the 
missile is obtained." 

In discussing the above with CDR Kowalskey, he advises that the drill MSD 
was going through last week was specifically to provide information for the 
Navy to answer this "issue paper." The final Navy HQ NASC-CNO coordinated 
input in response to the report was, "deferring program initiation until 
1978/79 would create a cost impact of approximately $27M." 

The writer will follow up on this issue with CNO and OSD personnel and keep 
you advised on additional follow-up action required. 



J. H. Garrett/ Jr. 

Manager 

Missile Systems Marketing 

JHGrnr 

cc: J. F. Reagan 

R. K. Gast 

J. J. Halisky 

T. V. Murphy 

R. P. Marovich 

H. J. Peters 



EXHIBIT A-l 



19 






Rockwell International 



& 



8313-457-74 



PGP: 



HAS THIS ALL BEEN "STRATEGIZED" Z I (f 



FROM 
Address 



4 



Wo 



J. H. Garrett, Jr. 
Missile Systems -Columbus 
D183 B6 
2573 






o 

dated 2 July 1974. This document has been 
comment and lists specific recommended FY 
service programs. The services are reques 
regarding same prior' to the document being 
decisions. 



6t 






uatiorfk^^/ 
)er," ' . I y 



(gram Analysis and Eval 
jrpose Forces Issue Pape 

released to each service for 
'76 funding actions on individual 
ted to submit their comments A Of 

finalized for DOD budget Js 



The following quotes the write-up on CONDOR: 



"Defer procurement of the buy of 405 CONDOR missiles planned 
for FY '76 and '77 and resume procurement in FY '78. The cost 
of the CONDOR system is high and can only be used on clear day, 
good visibility conditions. These factors apply but only 
limited procurement should take place until a night _adverse 
weather capability is developed and a reduced cost of the 
missile is obtained." 

In discussing the above with CDR Kowalskey, he advises that the drill MSD 
was going through last week was specifically to provide information for the 
Navy to answer this "issue paper." The final Navy HQ NASC-CNO coordinated 
input in response to the report was, "deferring program initiation until 
1978/79 would create a cost impact of approximately $27M." 

The writer will follow up on this issue with CNO and OSD personnel and keep 
you advised on additional follow-up action required. 



J. H. Garrett, Jr. 

Manager 

Missile Systems Marketing 

JHG:nr 



I 






cc: J. F. Reagan 

R. K. Gast 

J. J. Halisky 

T. V. Murphy 

R. P. Marovich 

H. J. Peters 



EXHIBIT A-2 



20 



The Committee considers the procurement and 
deployment of three different missiles for 
three separate aircraft as a luxury the Navy 
can ill afford and is not justified. 

Rockwell, therefore, turned its attention to the Senate 
Appropriations Committee as a means of counteracting the House 
measure. Reviewing this battle later in the fall during a 
briefing of Rockwell Group President M.D. Margolis, Dr. 
Reagan of Missile Systems Division attributed the House 
committee move to the effect of the OSD Program Decision 
Memorandum. Yet in a series of slides accompanying his 
presentatation (entitled 'CONDOR Status and Program Strategy"), he 
noted that Missile Systems Division's strategy on the House 
action was, among other things, to show strong support from 
OSD, presumably from offices other than Mr. Sullivan's, which 
had drafted the deferral memo. (See Figures 1 and 2) 



1 AUGUST 1974 



AS A PART OF A $5.0 BILLION REDUCTION ACTIVITY . . . THE HOUSE 
APPROPRIATIONS COMMITTEE RECOMMENDED COMPLETE 
TERMINATION OF THE CONDOR SYSTEM AND DELETION OF ALL 
PROCUREMENT AND R&D FUNDING FROM THE BUDGET. 

At This Point in Time the (Draft) P.D.M. Was Still "Preliminary" 
and Was Being Staffed But Apparently Strongly Influenced the 
H.A.C. Action . . . 

Figure 1 - Excerpt from Rockwell International 
"CONDOR Status and Program Strategy" 



21 



MSD ACTION AT THIS POINT WAS DIRECTED TO THE 
SENATE, OSD, AND THE NAVY TO: 

• RECOGNIZE AND COUNTER THE SULLIVAN DRAFT P.D.M. 

• SHOW STRONG NAVY BACKING OF CONDOR 

• SHOW STRONG OSD SUPPORT 



As a Result of This Effort: 

Figure 2 - Excerpt from Rockwell International 
"CONDOR Status and Program Strategy" 



On August 6th, Divisional President J.F. Reagan wrote to 
Rockwell Group President M.D. Margolis noting that, in con- 
nection with the appeal of the PDM and the House action, "We 
have had a well-organized program working with the Navy, OSD 
and Congress in support of the Condor budget activity." (See 
Exhibit B) 

Reagan went on: 



The other input which I got directly from 
Dr. Currie this morning described the reclama 
which he prepared to maintain full and total 
support for the program. Dr. Currie stated he 
would immediately pursue the matter to ascer- 
tain the real status [of the appeal]. 



22 



Infernal Letter • v J . ; Rockwell lntem?«;iona! 

Ds August 6, 1974 r;o 

to M. D. Margolis from J. F. Reagan 

AcWHffS . • Aoa-f.3s 



0928 



Su&iec: Condor Budget Status 



Both the House and Senate Armed Services Committees supported the 1975 
production and research and development budgets essentially as proposed 
by OSD and the Navy. In this regard, we have been working very closely 
with various committee members and staff members, as well as concerned 
OSD and Navy offices. We have also worked with the House and Senate 
Appropriations Committees in advance of their markups of the 1975 
Defense Bill. We have had strong support from the Senate and there 
was every indication that the House Appropriations Committee would also 
support the program. 

Condor got caught in the recent drive on the part of the House Appro- 
priations Committee to reduce the Defense Spending Bill. In this regard, 
the House Armed Services Subcommittee recommended that the funding for 
procurement and R$D for Condor for 1975 be lined out. 

We received advanced information on this action and have been working 
the problem with those most concerned. Some of the offices we have been 
dealing with are listed below: 

Congressman Devine (State of Ohio) 

Congressman Wiley (State of Ohio) 

Dr. Potter, Assistant Secretary of the Navy, R§D (nominated for 

Under Secretary) 
Dr. Malcolm Currie, Director of Defense Research and Engineering 
Mr. Jack Bowers, Assistant Secretary of the Navy for I$L 
Mr. Robert Parker, Prin, Deputy Director, Research and Engineering 
Mr. David Heebner, Deputy Director, Tactical Warfare Programs, DDR$E 
Adm. I. Kidd, CNM 

Adm. Thomas B. Hayward, Director, Navy Program Planning 
Adm. Christiansen, Asst. Deputy Chief of Naval Operations 
Adm. McKenzie 
Adm. Houser 

Capt. Fritz, CNO Air Warfare 
Various members and staff specialists in the Senate Appropriations 

Committee 
Various members and staff specialists of the House Appropriations 

Committee 

Many of the above contacts have been made personally by me, Pete Paraskos 
and other members of the MSD staff. 



EXHIBIT B 



23 



M. D. Margolis 
August 6, 1974 
Page 2 



We have had a well organized program working with the Navy, OSD and 
Congress in support of the Condor budget activity. Mr. Joe Garrett 
of MSD has spent considerable time in Washington working with the 
Washington Office. In this regard, Bill Clark, Doc Watson and 
Al Grasselli have been extensively involved. The Washington Office 
has been very active. Mr. Garrett is acting as the MSD focal point. 

The Navy has undertaken reclama action and has formulated a position 
to get the money restored. As of this morning, I have conflicting 
inputs on the reclama which is in transit from OSD to Congress. One 
input states that the reclama from Schlesinger proposed that "the 
production funding be postponed but that funding to complete the 
OPEVAL program and continuing R§D be restored. This would amount to 
$14M for 1975. The other input which I got directly from Dr. Currie 
this morning described the reclama which he prepared to maintain full 
and total support for the program. Dr. Currie stated he would 
immediately pursue the matter to ascertain the real status. 

It was Dr. Currie 's suggestion that we continue to work the 
Congressional area and to attempt to get information directly to 
Senator McClellan, Chairman of the Senate Appropriations Committee; 
this is underway. 

In addition to the above activity, we have circulated in the Washington 
area a summary position paper presenting cost and capability information 
on behalf of the Condor system. 

The date of the joint meeting of the conferees is not yet set, but it 
could occur within one week. 





J. F. Reagan/ 



EXHIBIT B (cont.) 



24 



Apparently, Dr. Currie was assisting Rockwell personnel 
in their efforts to turn back the House Appropriations Commit- 
tee plan to delete funds for CONDOR, for Dr. Reagan noted also 
that : 

It was Dr. Currie' s suggestion that we 
continue to work the Congressional area and 
to attempt to get information directly to 
Senator McClellan, Chairman of the Senate 
Appropriations Committee; this is underway. 

In his statement submitted to the subcommittee, Dr. Currie 
acknowledged his support for the CONDOR program in this period, 
stating : 

During the DoD planning cycle of 1974 
in which the Five Year Defense Program is 
reviewed, I supported the inclusion of pro- 
curement funding for FY 76 and 77 for CONDOR 
in order to preserve the option to produce 
the weapon system in the event the operational 
evaluation proved satisfactory. I also wrote 
a memorandum to the Navy expressing some con- 
cern I had about the CONDOR Program. (The 
memorandum was signed for me by Mr. Robert 
Parker.) Again in the Fall of 1974 in the 
preparation of the FY 76 budget, I supported 
the inclusion of FY 76 procurement funds for 
CONDOR for the same reason -- that is, so that 
budgeting would be consistent with the DSARC/ 
Secretarial decision process. 



25 



Secretary Schlesinger * s letter, referred to in the 
August 6th letter from Dr. Reagan to M.D. Margolis, hewed 
to the earlier OSD position that no procurement of CONDOR 
was anticipated during fiscal years 1975, 1976, or 1977. 
This position left the CONDOR in a very doubtful situation 
in terms of future production contracts and in terms of 
cash flow for the contractor. (See Figure 3) 



The OSD Reclama to the Senate Appropriations Committee 
Contained the Following in Secretary of Defense 
Schlesinger's Cover Letter of 6 August 1974 : 

"The CONDOR Development and Procurement Reductions, Which Would Terminate 
the Only Long-Range, Overland, Standoff Missile Available, Are of Concern. The 
Production Program Is Designed To Be a True Fly-Before-Buy Program Which Minimizes 
Production Investment Prior to Completion of Operational Evaluation. The Development 
Funds Are Required To Design Alternative Guidance, Propulsion, and Data Links Which 
Are Applicable to CONDOR and Any Other Follow-on Long-Range Air-to-Surface 
Weapon. Continued Development Is a Key Element for Application in Future Missiles 
or Reconnaissance Vehicles." 

But The Detailed Request in the Attachment to 

the Letter Contained the Following: 

"CONDOR. The FY 1975 Procurement Request Was Based on a Desire To Minimize the 
CONDOR Procurement Investment Pending Successful Completion of OPEVAL Testing. 
While Current DOD Plans Do Not Contemplate Procurement of the CONDOR Missile 
During the FY 1975-1977 Time Frame, S3.7M Is Required To Complete the OPEVAL 
Testing. Restoration of This Sum Is Requested." 

Figure 3 - Excerpt from Rockwell International 
"CONDOR Status and Program Strategy" 



The campaign by the CONDOR prime contractor continued, 
however, including extensive briefings of and contacts with 
Navy and OSD officials, as well as Congressmen, who were in a 
position to assist the effort to keep the program viable in 
the face of opposition from the House Appropriations Committee 
and from elements in OSD. (See Figure 4) 



26 



PERSONNEL CONTACTED/BRIEFED (Cont) 

OSD 

• Malcom Currie (DDR&E) 

• Robert Parker (DDR&E) 

• Arthur Mendolia (ASD, l&L) 

• BGEN. Clyde Spence (DDR&E) 

• CAPT. W. G. "DOC" Townsend (DDR&E) 

• John Ahem (Systems Analyst) 

• Nelson Pingitore (Comptrollers Office) 

• CAPT. Ed Barrineau (ASD, l&L Staff) 
NAVY 

• J. William Middendorf (Secretary of the Navy) 

• David Potter (Under Secretary of the Navy) 

• Jack Bowers (Asst SECNAV, l&L) 

• Joe Crupi (Asst SECNAV, l&L Staff) 

• ADM. I. C. Kidd (CHNAVMAT) 

• VADM. W. D. Moran (CNO R&D) 

• VADM T. B. Hayward (CNO Director Program Plans) 

• VADM. W. D. Houser (CNO, Air Warfare) 

• RADM. R. P. McKenzie (CNO Staff) 

• RADM. Jack Christiansen (CNO Staff) 
™" • RADM C. F. EKAS (DEP. R&D NAVMAT) 

Figure 4 - Excerpt from Rockwell International 
"CONDOR Status and Strategy" 



These efforts met with success on August 9, when the 
Defense Department Comptroller sent a letter to the Senate 
Appropriations Committee, receding from the earlier depart- 
mental position and requesting full funding for the CONDOR 
for fiscal year 1975, including monies for initial procure- 
ment. (See Figure 5 ) This was also Dr. Currie's position 



27 



On 9 August, T.E. McClary, Assistant Secretary of Defense 
(Comptroller) Sent the Following to Senator McClellan and 
Requested That It Be Accepted as a Revision to the Secretary 
of Defense Detailed Request: 

IT IS REQUESTED THAT THE FULL $19 MILLION BE-RESTORED TO 
PROVIDE FOR FINAL OPEVAL TESTING AND INITIAL PROCUREMENT 
OF THE CONDOR MISSILE SYSTEM. PRIOR TO PRODUCTION COMMIT- 
MENT A DSARC IS PLANNED IN THE NEAR FUTURE IN WHICH UNIT 
PRODUCTION COSTS WILL BE A MAJOR CONSIDERATION. THIS 
MISSILE PROVIDES THE MOST ACCURATE AIR-TO-SURFACE LONG- 
RANGE ORDNANCE DELIVERY EVER DEVELOPED AND PROVIDES A 
SURGICAL STANDOFF STRIKE CAPABILITY AGAINST BOTH SEA AND 
LAND TARGETS. IT REPRESENTS THE CULMINATION OF ABOUT 8 
YEARS R&D EFFORT COSTING APPROXIMATELY $250 MILLION. THE 
AVAILABILITY OF THIS CAPABILITY IN CONFLICTS SUCH AS THE 
MID-EAST WAR IS DEEMED TO BE POSSIBLY DECISIVE TO THE 
OUTCOME . 

Figure 5 - Excerpt from Rockwell International 
CRie009 "CONDOR Status and Program Strategy" 



Following favorable Senate action on the CONDOR matter, 
the issue faced final resolution in the Conference Committee 
of the House and Senate on the Fiscal Year 1975 Defense Ap- 
propriations Bill. 

Meanwhile, on August 14, Mr. Robert Parker, Principal 
Deputy to Dr. Currie, visited the contractor's facility in 
Columbus for a briefing on the CONDOR and other systems. In 
his report to Missile Systems Division President Reagan two 
days afterward, Mr. H.J. Peters noted that "Mr. Parker strongly 
supports the program and was especially interested in the low 
realistic costs presented." 

A week later, the Defense Department, on August 22, issued 
an Amended Program Decision Memorandum (APDM) affirming the 
inclusion of the CONDOR in the coming Administration budget 
for fiscal year 1976, PROVIDED that the Navy could submit by 
November 1 

...a suitable program for the deployment of 



77-936 O - 76 



28 



these assets a plan for continuing the 
reduction of the missile and pod costs, 
a plan for future missile/pod procure- 
ments, and a review of joint service 
utilization. 

In mid-September, the Appropriations Conference Committee 
reached its compromise on the CONDOR program. The appropriations 
bill, as written and ultimately passed, reflected the maximum 
desires of none of the actors. It deleted monies for develop- 
ment of a dual-mode seeker for the CONDOR and deleted $3.7 
million in procurement dollars for operational evaluation of 
the CONDOR. However, it provided the same amount, $3.7 million, 
in research and development funds, for the same purpose - oper- 
ational evaluation - while adding an additional $2 million for 
other CONDOR tests. 

CONDOR advocates did not, thereby, obtain the entire $19 
million originally requested for the program, but they did 
obtain more than the House Appropriations Committee had recom- 
mended and more than Secretary Schlesinger or Assistant Sec- 
retary Sullivan had asked for in early August. Most importantly, 
the program remained viable in the face of efforts to terminate 
it or to defer production. 

In a letter on September 19th (the day following the 
conference committee announcement) to MSD President Reagan, 
H.J. Peters noted that the subject was closed as far as the 
fiscal year 1975 budget was concerned and turned his attention 
to the ongoing OSD actions concerning the fiscal year 1976 
budget. On this he wrote: 

The PDM, which resulted from the "issue 
paper" referred to by Garrett [in the previously 
cited letter of July 10th] , has been officially 
rescinded by Currie/Sullivan and CONDOR is in 
the 1976 POM [the Navy's Program Objective 
Memorandum] at $85M [million] for 205 missiles. 

We obviously need a completely new program 
plan/strategy for CONDOR which includes plans 
for increasing quantity of buy, details of the 
production model, and growth to day/nite, turbo 
jet, etc. 

Company officials thus began planning to increase the value 
of the anticipated production contract by increasing the total 
procurement. The turbojet engine, then enjoying considerable 
favor because of developmental successes in the cruise missile 



29 



program, and the addition of a day/night capability would not 
only enhance CONDOR'S ability, they would make the eventual 
production contract more lucrative still. However, these and 
other variations on the "basic CONDOR" were not part of the 
system when it came up for a production decision a year later. 
At that time, individuals skeptical of the CONDOR program were 
to argue that the system should not be moved from advanced 
engineering development into production until such additional 
capabilities could be integrated into the production model. 

The experience of the summer budget activities, meanwhile, 
led the contractor's officials to conclude that their "sustained 
efforts" to influence key decision-makers had enjoyed success 
both in OSD and in Congress. In the November company briefing 
earlier alluded to, MSD President Reagan listed the results of 
these efforts, highlighting in particular the success Rockwell 
had achieved in having its OSD supporters overturn early or 
tentative Defense Department budget recommendations. (See 
Figures 6 § 7) 



CONCLUSION 

There Is Strong Support for CONDOR in: 

• MOST ELEMENTS OF THE U.S. NAVY; 

• MOST OF OSD 

• THE SENATE (COMPARED WITH THE HOUSE) 

There Is a Problem with: 

• SULLIVAN (PROGRAM ANALYSIS AND EVALUATION) 

• HOUSE APPROPRIATIONS COMMITTEE 

• COMPTROLLERS (USN AND OSD) 

However-The Result of the Congressional Action Was 

to Weld Together CONDOR Supporters. 

^.so,6 Figure 6 - Excerpt from Rockwell International 
"CONDOR Status and Program Strategy" 



. 



30 



RESULT OF MSD ACTION 



• ISSUE PAPER (PDM) REVISED AND PUBLISHED ON 23 
AUGUST 1974 AS AN AMENDED PROGRAM DECISION 
MEMORANDUM (APDM) INDICATING CONDOR 
PRODUCTION IN FY 1976 AND FY 1977 (205-200). 



THIS RESULTED FROM A SUSTAINED EFFORT ON THE 
PART OF MSD TO REVOKE THE ORIGINAL P.D.M. 



Figure 7 - Excerpt from Rockwell International 
"CONDOR Status and Program Strategy" 



After reviewing past actions and lessons learned, Dr. 
Reagan turned to the Missile Systems Division's goals and 
plans for increasing funding for the CONDOR program (even 
during fiscal year 1975 then in progress) , for assuring a 
favorable production decision during calendar year 1975, 
and for expanding into other markets. The method for 
increasing fiscal year 1975 funding, despite Congressional 
spending limitations on the CONDOR, was to have the Navy 
reprogram funds from other programs. (See Figure 8) 



31 



OBJECTIVES 






• OBTAIN DSARC III APPROVAL 

• NEUTRALIZE THE 3 BIG DISSENTERS 

• OBTAIN REPROGRAMMED U.S. NAVY GFY 1975 

FUNDING 

• OBTAIN FY 1976 NAVY PRODUCTION/ FLEET 

INTRODUCTION CONTRACT 
















• EXPLOIT CONDOR DERIVATIVES 

• EXPAND CONDOR TO OTHER MARKETS 

• SAC 

• TAC CONVENTIONAL 

• TAC NUCLEAR 

• FOREIGN 




... 


J3 


Figure 8 - Excerpt from Rockwell International 
"CONDOR Status and Program Strategy" 





To achieve these objectives, Dr. Reagan considered that 
the company had to neutralize opposition in the House Appro- 
priations Committee by a flow of positive information, by 
influencing the General Accounting Office, and by influencing 
members and staff. (See Figure 9 ) 



32 



NEUTRALIZATION OF HOUSE APPROPRIATIONS COMMITTEE 

I. ASSURE A FLOW OF POSITIVE INFORMATION 

— Brochures; Handouts; White Papers 

— Cost and Production Location Data 

II. ASSIST/INFLUENCE G.A.O. INPUT TO COMMITTEES 

III. MAINTAIN CONSTANT CONTACT WITH STAFFERS 

IV. INFLUENCE KEY MEMBERS: 



*Mahon 


— Texas 


*Sikes 


— Florida 


♦Flood 


— Pennsylvania 


♦Flynt 


— Georgia 






Slack 


— W. Virginia 


McFall 


— California 



*Members of Defense Subcommittee 

Figure 9 - Excerpt from Rockwell International 
"CONDOR Status and Program Strategy" 



Also important to the success of the Rockwell marketing 
strategy was the "neutralization" of skepticism within the 
Office of the Secretary of Defense, skepticism which was ap- 
parently perceived to reside primarily in Mr. Sullivan's office 
and in the Office of the Comptroller, Mr. Terence McClary. To 
achieve this, Dr. Reagan seems to have proposed a plan whereby 
Dr. Currie and/or his Deputy, Mr. Robert Parker, would seek to 
overcome CONDOR critics directly themselves and indirectly 
through two Navy officials, Under Secretary of the Navy D.S. 
Potter and Vice Admiral Thomas Hayward, Director of the Navy 
Program Planning Office. Dr. Reagan's plan included arguments 
to be made, one of which foresaw a strong response to the 
Amended Program Decision Memorandum, a response which the Navy 
still owed as a condition of having the CONDOR included in the 
fiscal year 1976 budget (see page 26) . (See Figure 10) 



33 



NEUTRALIZATION OF OSD P. A. & E. AND COMPTROLLER 

Schlesinger 



v 



Currie 
Potter -« *■ Parker 



ADM. 
— *■ Hayward 



PROGRAM ANALYSIS 

AND EVALUATION 

L. Sullivan 

T. Christie 



s 






y 



COMPTROLLER 
J. McClary 

N. Pinatore 




• HIGHER QUANTITIES 

• LOWER COST 

• RESPONSE TO APDM (STRONG AND COMPLETE) 

• STRONG CASE FOR DAY-ONLY STRIKE WEAPON 

• CLARIFY CONDOR/HARPOON RELATIONSHIP 
Figure 10 - Excerpt from Rockwell International 

"CONDOR Status and Program Strategy" 



\ 



A similar strategy was apparently envisioned for obtaining 
Congressional approval for CONDOR production during 1975. Sup- 
port from Dr. Currie and Mr. Parker, according to the briefing, 
could be counted on to help obtain OSD concurrence in the Navy's 
budget submission, a necessary prerequisite to a satisfactory 
action by the authorizing and appropriating committees of the 
Congress. (See Figure 11 ) 

Again, the MSD President planned a campaign of briefings 
and contacts for decision-makers by Rockwell employees and 
consultants in order to put across the company's program and 
message. (See Figure 12 ) 



34 



CONGRESSIONAL APPROVAL 




APPROPRIATION 



Figure 11 - Excerpt from Rockwell International 
"CONDOR Status and Program Strategy" 



ROCKWELL INTERNATIONAL PERSONNEL MAKING 
CONTACTS/BRIEFINGS 

DR. J. F. REAGAN 
P. G. PARASKOS 
H.J. PETERS 
J. H. GARRETT 
J. R. HARPER 
A. A. GRASSELLI 
DOC WATSON 



Consultants 



AL SIMON 
TOM BLOUNT 
LGEN RAY PEERS 



Figure 12- Excerpt from Rockwell International 
"CONDOR Status and Program Strategy" 



35 



At about the time of the Rockwell strategy briefing, 
final decisions on the Department of Defense budget submis- 
sion for fiscal year 1976 were being made. The deadline for 
the Navy submission of its program and plans for the CONDOR 
(established in the August APDM) had been postponed to 
November 15th. 

On November 19th, while the Comptroller's office was 
preparing the draft Program Budget Decision (PBD) , documents 
reviewed by the subcommittee reflect that Mr. Christie wrote 
to Mr. J.F. Cove in the Comptroller's office pointing out that 
the Navy had not complied with the requirement to submit its 
plans and programs. Therefore, Mr. Christie suggested, the 
Secretary should be given the option of making a separate 
decision to defer CONDOR production until fiscal year 1978. 

Nevertheless, on December 4th, Deputy Secretary Clements 
approved an alternative that left the CONDOR program intact for 
fiscal year 1976, pending submission of the data requested in 
August. Later in the month, the Navy came forward with its 
submission. 

After reviewing the delayed Navy program, Assistant Sec- 
retary Sullivan, on December 19th, wrote to Secretary Schlesinger 

The arguments used to convince you to 
reverse your PDM decision which deferred pro- 
curement until FY 78 turned out to be shallow 
at best. . . 

My staff has reviewed the Navy's restruc- 
tured program and find no new substantive argu- 
ments presented beyond those offered by the 
Navy in defending their POM CONDOR procurement 
this past summer. In particular, the Navy de- 
ployment plans for CONDOR provide no special 
concepts for use of a limited quantity of this 
supposedly unique weapon. The cost has not been 
reduced, and the Air Force is not participating . 

Though delayed, the letter reached Secretary Schlesinger. 
On Christmas Eve, according to the testimony of Mr. Christie, 
the Secretary called Assistant Secretary Sullivan to discuss 
the CONDOR issue. Since Mr. Sullivan was absent, Mr. Christie 
conferred with the Secretary on the problems in the Navy's 
program submission. The Secretary's reaction, testified to 
by Mr. Christie, was that: 

It just was kind of late in the game, 
the budget had been put together, and he sort 



36 



of agreed that he had the question about the 
program, but he preferred to leave it. 

Thus the CONDOR program came through the 1974 OSD and 
Congressional review processes. Out of the efforts to main- 
tain and accelerate its momentum, there emerged a pattern of 
relationships that was to continue through 1975 and into 1976 
as the missile program faced successive reviews and evaluations. 
It is important to note, in reference to future activities, that 
the company apparently established ties with the DDR§E and 
its two top officials. In its internal correspondence, references 
to "appropriate OSD officials" contacted by the company were 
apparently references to these two officials, since (1) Dr. Currie, 
Mr. Parker, and Mr. Heebner (all of DDR§E) were the only ones listed 
in one Rockwell document as being contacted and (2) the offices of 
the Comptroller and the Assistant Secretary for Program Analysis 
and Evaluation were reflected in Rockwell documents as "dissenters" 
while no other elements of the Office of the Secretary of Defense, 
including the Office of the Assistant Secretary for Installations 
and Logistics, were involved in the CONDOR program decisions at 
that time. 



37 



CONDOR OPERATIONAL EVALUATION, DECEMBER 1974 - SEPTEMBER 1975 

The last step to be completed before a production de- 
cision on CONDOR was an operational evaluation of prototype 
production models, the first of which were accepted by the 
Navy in August 1974. The Commander, Operational Test and 
Evaluation Force (COMOPTEVFOR) commenced evaluation on 
December 5th at the Naval Weapons Center, China Lake, Cal- 
ifornia. 

Two weeks later, COMOPTEVFOR, in a message to the Chief 
of Naval Operations, placed the CONDOR evaluation in a "de- 
ficiency status" due to a series of missile malfunctions. 
During the same period, in other official correspondence, 
COMOPTEVFOR, Rear Admiral R.R. Monroe, stressed the need 
to subject CONDOR to real-life tests against surface-to-air 
(SAM) missiles as a means of testing its ability to evade 
or penetrate SAM defenses expected around the heavily de- 
fended targets it was designed to destroy. In a memorandum 
at the end of December, COMOPTEVFOR noted that the CONDOR 
program would be more endangered by omitting these tests 
than by conducting them. 

Approval was not granted for actual live firings against 
the CONDOR, but the CONDOR was subsequently tested against 
a variety of acquisition and tracking systems associated 
with SAM defenses, on the assumption that, if it could eas- 
ily be acquired and tracked, then it could probably be as 
readily destroyed by SAMS. Following these tests, COMOP- 
TEVFOR reported his results and suggested that the CONDOR 
would require penetration aids if it was to avoid inter- 
ception on the way to the target. 

In the first week of March, Admiral Monroe sent a sit- 
uation report (SITREP #9) to the Chief of Naval Operations, 
stating that solutions to the missile malfunction problems 
experienced in December were in hand and that he proposed 
to remove CONDOR from the deficiency status and resume mis- 
sile test firings at the end of the week. 

On April 2nd, the Naval Weapons Center at China Lake 
informed the Commander, Naval Air Systems Command (NAVAIR- 
SYSCOM) by message that: 

The upcoming transition from pilot to full pro- 
duction is of serious concern to this center. The 
CONDOR system (missile and pod) has demonstrated ab- 
ility to meet intended performance goals. Reliability, 
quality assurance and configuration control demonstra- 
ted to date have not been adequate for a production 
program. 



38 



Specific areas of concern were further detailed. Essen- 
tially, the test center had found that, while CONDOR could 
meet the established performance standards, there remained 
questions as to whether it would be able to do so on a reg- 
ular basis. 

Significance of Reliability . Reliability was es- 
pecially significant in a system with the mission and cost 
of CONDOR. Under the Navy's "all around" standard, there 
could be no 'duds' or malfunctioning missiles among those 
accepted for fleet deployment. For ammunition that is pur- 
chased for high-volume, rapid- rate-of- fire weapon systems, 
such as a 40mm. anti-aircraft battery, an occasional 'dud' 
is not significant either in terms of cost or firepower. 
But with a system like CONDOR, where the investment in 
each unit is high, where the size of the system is such 
as to make storage aboard aircraft carriers a concern, 
and where a single missile failure could represent a 
mission failure, all rounds of ammunition, that is, all 
missiles, must be in an "up" or no-fail condition. The 
basic reliability of the system and the contractor's ability 
to assure a regular and high rate of reliability in pro- 
duction models are essential. 

Forecasts of eventual weapon system reliability in 
production models are difficult when the tests are being 
performed on pilot models which have been fabricated 
either by prototype (hand- tooling) methods or by regular 
production (hard- tooling) methods that are still being 
worked out. Pilot models manufactured by prototype or 
early production methods may differ widely from those 
built by the mature manufacturing techniques that will be 
used if the missile enters serial production. While it 
may be easy, for example, to fix a recurring subsystem 
problem in a prototype model, integrating the solution into 
the regular production process may pose significant en- 
gineering problems. Judgments about the performance of 
production models that are based solely on experience with 
a limited number of pre-production or prototype models 
are ideally, conservative in nature. 

On April 21st, 1975, COMOPTEVFOR sent a lengthy mes- 
sage to the Chief of Naval Operations (CNO) reviewing the 
results to date of the CONDOR operational evaluation. The 
report was confined to reliability and maintainability data. 
It noted that the test data was insufficient for a deter- 
mination of the sources of CONDOR'S problems in these areas. 
COMOPTEVFOR promised that further decisions would be forth- 
coming as soon as all failure analysis reports were avail- 
able and could be analyzed to determine the reasons for 
CONDOR'S low mean time between failures (MTBF) . 



39 



DDRSE Concern. During this period, according to doc- 
uments obtained by the subcommittee, emerged the first ex- 
pressions of concern on the part of the Directorate of De- 
fense Research and Engineering about the poor results of the 
operational evaluation. In a letter to Rockwell Missile Sys- 
tems Division President, Dr. J.F. Reagan, Rockwell's CONDOR 
project director, Mr. H.J. Peters, relayed comments from a 
recent conversation he had had with Captain Herman Turk of 
DDR^E's division of test and evaluation: 

Herm Turk is actively working the CONDOR pro- 
gram and is very much in favor of CONDOR... it is 
Turk's position that ADM Monroe is being much too 
tough on CONDOR. He [Turk] is preparing a formal 
report requesting that firing #6 (direct hit/failure) 
and firing #8(cloud in the way/missile stalled) be 
reclassified as successful tests. He is attempting 
to show that CONDOR has met a threshold of 85% of 
the missiles fired achieving successful hit... His 
presentation will speak to the non-professionalism 
of VX-5 [the designation of the test squadron] in 
the early firing and may suggest that the early 
failures and no-test be eliminated from the count. 

As early as midway through the operational evalua- 
tion, therefore, DDR§E seemed to be second-guessing the 
Navy's test and evaluation force commander on the grounds 
that the latter was being too exacting in requiring that 
the CONDOR satisfy high standards. This form of apparent 
advocacy of the program seems out of character for the of- 
fice nominally in charge of screening the services' test 
and evaluation results to ensure their thoroughness and 
accuracy. Criticizing a service test force for being "much 
too tough" is also at odds with Dr. Currie's 1976 report 
to the Congress, wherein he stated that the "major objec- 
tives" of his office's test and evaluation (T§E) program 
were to: 

Continue to improve our capability for provid- 
ing independent and objective T§E inputs to the weapon 
system acquisition process. 

Conduct adequate Development Test and Evaluation 
(DT§E) to verify that engineering designs are in hand 
and adequate Operational Test and Evaluation (OT§E) to 
verify operational effectiveness and suitability of 
new systems. 

Increase emphasis on the T§E required to deter- 
mine weapon system vulnerability in a countermeasures 
environment and system reliability and maintainability 
under operational conditions, [emphasis added] 



40 



Such criticism of being "too tough" additionally raises 
questions about the assertion, in the same report, concern- 
ing"... the greatly improved quality of T§E data now being 
presented to the Defense Systems Acquisition Review Council 
(DSARC) ." 

The twin criticisms brought by Captain Turk of the 
DDR5E office -- that the operational test and evaluation 
force was "unprofessional" in it's uncompromising evaluations 
and that certain "failures" or "no-tests" should be scored 
as successes or excluded from the sample -- were to recur 
through the final stages of the drafting of the DSARC action 
memorandum during October 1975. 

DSARC Preparations and Cancellation. A month later, 
in May, the Commander, Naval Air Systems Command, which 
controlled the CONDOR program, informed COMOPTEVFOR and 
other naval commands involved that July 15th had been es- 
tablished as the date for the meeting of the DSARC to re- 
view CONDOR for production. 

In his message, COMNAVAIRSYSCOM noted that the round 
of preparatory briefings and meeting for this event would 
commence on May 15th and asked COMOPTEVFOR to provide the 
necessary operational evaluation data for this purpose. 

On June 3rd, Admiral Monroe suggested to the CNO that 
the proposed DSARC schedule was premature in view of the 
fact that the raw results of the evaluation revealed no 
definite answer to the question of CONDOR'S readiness for 
production. COMOPTEVFOR further pointed out that he was 
continuing to force the pace of the operational evaluation 
to the maximum and was eliminating any tests not essential 
to this evaluation. 

On the same day, the staff of the Assistant Secretary 
of Defense for Installations and Logistics (ASD (I§L)) 
issued a memorandum to staff personnel at the Office of 
the Secretary of Defense (OSD) level setting forth the 
following issues to be addressed in the DSARC scheduled 
for 15 July: production readiness, test and evaluation 
results, approved inventory figures, CONDOR utilization 
by the Air Force, cost and cost reduction, missile con- 
figuration alternatives, and Congressional budget action. 

Subsequently, COMOPTEVFOR reported serious problems 
with the CONDOR'S tail control mechanism, which he felt 
would have a major impact on the forthcoming program de- 
cisions. Occurrence of several failures in this area, he 
noted, has raised the problem to the top of the list of 
CONDOR reliability and maintainability issues. On June 



41 



24th, therefore, Navy representatives orally requested of 
the ASD(I$L), who was to chair the CONDOR production DSARC , 
that the planned meeting be delayed pending resolution of 
problems revealed by COMOPTEVFOR. 

Thereafter, on July 14, the ASD (I$L) sent a memorandum 
to the Assistant Secretary of the Navy for Installations and 
Logistics, advising him that postponement of the CONDOR 
DSARC was acceptable and that he would hold open September 
2 as a tentative date for the delayed meeting. 

The ASD(I§L), however, made the rescheduling of the 
DSARC contingent upon prior and satisfactory Navy compliance 
with ten points, as follows: (1) resubmission of a 
complete and acceptable Decision Coordinating Paper; 
(2) presentation of a cost reduction/cost avoidance 
program for pre-production and production phases; (3) 
provision of assurances that the CONDOR performance and 
reliability goals had been met and that technical data 
and equipment existed to assure support for the weapon 
when deployed; (4) consideration of the A- 7 aircraft as 
a supplemental launch platform; (5) consideration of the 
optimum production rate for alternative program procure- 
ment quantities (this item addressed Navy-OSD differences 
over the total number of CONDORs to be procured) ; (6) 
consideration of the acceptability to the Navy of the 
CONDOR variant developed in a joint Navy-Air Force study; 
(7) consideration of the question of supplying the CONDOR 
with an all-weather, all-environment capability; (8) 
statement of the CONDOR business management plan with con- 
sideration of the question of effectiveness of competition 
as a means of cost reduction; (9) a statement on the val- 
idation of the CONDOR'S ability to meet its "design-to- 
cost" goal during production; and (10) a statement con- 
cerning methods used to estimate CONDOR operating and sup- 
port (0$S) costs. 

About this time, on July 10, Captain Turk from DDR^E 
visited Rockwell's Missile Systems Division (MSD) in Col- 
umbus, Ohio, to gather additional contractor views on the 
progress of the operational evaluation. In a July 2nd 
intracompany memo reporting Captain Turk's forthcoming 
visit, Rockwell project director H.J. Peters noted to MSD 
President Reagan that three of the four points Captain 
Turk had asked to be briefed on related to the CONDOR 
operational evaluation. 



42 



Navy Reviews . The decision-making process for a weapon 
in the advanced engineering stage calls for decisions at sev- 
eral levels. In August and September, then, CONDOR faced an 
initial review prior to being presented to the CNO Executive 
Board (CEB) . This initial review was termed the Pre-CEB. 
The program would again be reviewed by the CEB itself and 
later by the Chief of Naval Operations and the Secretary 
of the Navy (CNO/SECNAV Review). 

Following approval through these Navy reviews, the pro- 
gram would then be reviewed at the level of the Office of 
the Secretary of Defense (OSD) . The first in the series 
of OSD reviews is called the pre-DSARC or the Principal's 
Pre-Brief ing. It ordinarily occurs shortly before the 
DSARC itself and involves a briefing on tne program under 
consideration to the members of the DSARC by their staff. 

In preparation for this series of examinations and be- 
cause of continuing doubts about CONDOR'S readiness, COM- 
OPTEVFOR requested in mid-July that CNO convene a formal 
review board to study a number of specific questions about 
CONDOR raised during the operational evaluation. COMOPTEVFOR 
stated that issues relating to the basic design, quality con- 
trol, and manufacturing processes associated with CONDOR 
would have a fundamental impact on any assessment of its 
reliability but that these issues were beyond his competence 
to address. He requested that the Chief of Naval Material 
convene a special review board to review these questions. 

Special Review Board. As a result of this request, 
the Chief of Naval Material (CHNAVMAT) held a special re- 
liability review on 24 and 25 July at the Navy's test 
facility at China Lake. 

This development was viewed by the missile contractor 
as a victory. 

In a personal letter to Dr. Currie's Principal Dep- 
uty, Mr. Robert N. Parker (who had formerly been employ- 
ed by Rockwell), the CONDOR project director for Rockwell, 
H.J. Peters, expressed his interpretation of the outcome: 

After our discussion on Condor, I thought it 
would be best to provide you with specific information 
on the OPEVAL. . .VX-5 collected reams of data in their 
factory- to-firing evaluation. You could easily take 
incidents such as they relate to faults and failures 
and make inappropriate analyses that gives Condor a 
reliability image problem. 



43 



Fortunately, COMOPTEVFOR has recognized that a 
technical agency must analyze the data and determine 
the real status of Condor, especially on reliability. 
NAVMAT [Navy Material Command] and NASC [ Naval Air 
Systems Command] are heading up this evaluation with 
COMOPTEVFOR, NWC [Naval Weapons Center] , OPNAV [Office 
of the Chief of Naval Operations], and industry support. 
I am confident that the Navy will place the VX-5 COMOP- 
TEVFOR data in its proper perspective. 

The report of the review was forwarded by COMNAVAIRSYSCOM 
to the CNO on July 30th. It reflected some of the contractor's 
expectations but made interesting observations in other areas. 
The report indicated that the reliability of CONDOR hardware 
was less than desired and that a possible cause for this was 
the foreshortening of the technical evaluation held prior 
to the full operational evaluation itself. Regarding the 
problems with the CONDOR tail control, COMNAVAIRSYSCOM and, 
in his comments on the report, CHNAVAT both agreed that a 
solution was within the "design state of the art" and could 
be expected imminently. 

CHNAVMAT also noted that the review had disclosed several 
"operational limitations" which might require design changes 
in the CONDOR at a later time. Here it is important to recall 
that the criticism of the CONDOR frequently related to issues 
that were outside the scope of the reliability testing and 
outside the scope of the special review board, which addressed 
only reliability questions. 

After COMOPTEVFOR' s extensive tests of CONDOR against 
defensive fire control systems, the operational evaluation 
was increasingly limited to the issue of reliability and 
the subsidiary matter of maintainability. Likewise, the 
review board was restricted in its focus to those issues 
relating to production line reliability, issues which were 
generally agreed to be solvable. 

Nevertheless, even on this narrow subject, CHNAVMAT 
found it difficult to be fully reassuring. He noted that 
unless significant improvements were made in the quality 
assurance program by Rockwell and Hughes, a major sub- 
contractor, it would be impossible to maintain the existing 
performance capabilities of the equipment. CHNAVMAT went 
on to cite a series of specific deficiencies in this area. 
In conclusion, he pointed out that one of the major lessons 
learned from the special review was the CONDOR had not been 
ready to begin operational evaluation, with the result that 
the operational evaluation had constituted more of a "pre- 
qualification test." 



77-936 O - 76 



44 



In summary, expert naval opinion itself suggested that: 
(1) the CONDOR had operational limitations that were not 
being addressed by the review process, (2) the system had 
not been ready for operational evaluation but only for pre- 
qualif ication testing, and (3) the contractors had not 
evidenced an ability to provide consistently high levels of 
reliability and general quality assurance required by the cost 
and mission of the missile. These reservations were to 
figure prominently in the later decision-making at the OSD 
level, where other authorities took a less sanguine view 
than the Navy of the CONDOR program's ability to overcome 
its problems. 

Also of importance at this time were the efforts of the 
contractor to rebut the unsatisfactory finding of COMOPTEVFOR 
in regard to missile reliability. Inasmuch as reliability 
was of primary concern to each of the DSARC principals, and 
was virtually the only concern of Dr. Currie, any efforts 
to cast operational evaluation findings in a more positive 
light would be of considerable help in alleviating this 
concern. Additionally, to the extent that the production 
decision debate could be restricted to resolvable problems 
such as reliability, other less soluble issues such as cost- 
effectiveness and vulnerability would be pushed aside. 



45 



DSARC III MILESTONE AND PREPARATION, AUGUST-SEPTEMBER 1975 

The Defense Department directive for the Defense Systems 
Acquisition Review Council provides for a three-stage review 
of all major weapon development projects. The last "DSARC 
Milestone" covers production and deployment decisions and 
may be split into two or more portions, although this divi- 
sion is not specifically provided for in the directive. The 
Assistant Secretary of Defense for Installations and Logistics 
is designated by directive as the DSARC Chairman "for production 
decisions and for all special reviews when system production, 
procurement, maintenance or logistic support is the primary 
issue." The DSARC Chairman is directed to appoint an Executive 
Secretary for any DSARC meeting. The purpose of the DSARC re- 
views is to "...ensure that the advice given to the Secretary 
of Defense is as complete and as objective as possible." 

Prior to the convening of the DSARC, Defense Department and 
service directives require a number of preliminary steps in con- 
nection with programs moving from the advanced engineering de- 
velopment stage to the production phase. For the CONDOR, most 
of these measures were implemented in August and September 1975. 

Provisional Acceptance for Service Use. Prior to being 
considered for production status, the CONDOR had to be pro- 
visionally accepted for service use in accordance with Navy 
instructions (OPNAVINST 4720. 9D and CNMINST 4720.1). On August 
5, COMNAVAIRSYSCOM recommended that CONDOR be provisionally 
accepted for service use on the strength of the efforts then 
under way to correct reliability deficiencies. 

Three days later, in a message to CNO , Admiral Monroe 
reviewed his earlier recommendation against granting CONDOR 
provisional acceptance for service use (PASU) status, re- 
iterating his belief that the test data did not warrant such 
action, that it would involve a breach of the Navy's reliability 
standards, that it would be premature to project an acceptable 
increase in reliability, and that to expect significant improvement 
after the beginning of production would be unwise^ since the rate of 
reliability growth generally decreases in serial production when engineering 
changes cannot readily be incorporated. 

Instead, COMOPTEVFOR suggested that the CNO grant a waiver 
of the requirement for PASU and that it be granted ultimately 
only if "highly successful results" were obtained from follow- 
on test and evaluation (FOT§E) of missiles produced under the 
waiver of the PASU requirement. This procedure would have 
permitted the Navy to hedge its bet on CONDOR by withholding 
provisional acceptance until rigorous, follow-on testing was 
conducted with satisfactory results. 



46 



On the day following COMOPTEVFOR' s message, the Assistant 
Secretary of Defense (I§L) sent a memo to his Navy counterpart, 
ASN (I§L) , advising him that none of the ten stipulations set 
forth on July 14th had been met by the Navy, including state- 
ments of reliability assurance. Therefore, wrote the Assistant 
Secretary, he planned to move the tentative DSARC meeting from 
September 2 to October 2. He reiterated that Navy completion of 
the requirements established in his memo of July 14 remained a 
prerequisite to a firm rescheduling of the DSARC. 

CNO Review. In spite of the strong reservations expressed 
by COMOPTEVFOR, the CNO Executive Board convened on August 12 
and the CONDOR was granted PASU status, based on the recommenda- 
tion of the Navy's CONDOR Program Manager, who held that, while 
the CONDOR had not demonstrated specif ied reliability, the opera- 
tional evaluation indicated that the specified reliability 
could be achieved. The still unresolved problem of the CONDOR 
tail control was expected to be solved in the fall, when the 
first missile with the modified control mechanism would be 
available for captive flight testing. 

Navy discussion of the details of plans for CONDOR production 
and further testing was deferred until August 15, when, at a so- 
called "mini-CEB" chaired by the CNO, it was decided to accelerate 
delivery of the first production line missiles to December of 1976 
so as to permit early evaluation of reliability improvements in- 
corporated in the pre-production models of the missile. The plan 
adopted called not only for the delivery of the first missiles 
to be advanced by one month, but also called for the production 
rate to increase from three per month in the first month to 25 
per month after nine months of production. 

A more conservative option considered -- to cut overall 
production in the first year from 208 missiles to 53 missiles 
and to maintain production at a low rate of 3-4 per month until 
satisfactory results were obtained -- was rejected because of 
the increased costs of operating a production line at less than 
capacity for an extended period. 

The production and follow-on test program decided on at the 
August 15 meeting was embodied in a memorandum of September 3 
from the Executive Secretary of the CNO Executive Board and be- 
came the Navy's preferred option for the DSARC. 

Meanwhile, on September 9, the Office of the Assistant 
Secretary of Defense (I§L) , in a memorandum to the Director of 
the DoD Product Engineering Services Office (PESO) , requested 
a "further production readiness review at the earliest possible 
date." The memo reviewed the OPEVAL results that had just be- 
come available and which prompted the request for a production 



47 



readiness review. Areas of concern included: (1) unsatis- 
factory reliability of missile and data link pod received 
from the factory; (2) incompatibilities between factory and 
field test limits; (3) possible need to redesign the flight 
line test set; (4) improvement of prime contractor and sub- 
contractor qualitv assurance programs; and (5) lack of trainers 
to support CONDOR. 

Decision Coordinating Paper. Prior to a DSARC, the 
service sponsoring the program must submit to the staff of 
the DSARC Chairman an initial or updated draft of the Decision 
Coordinating Paper (DCP) , which is the basic source of infor- 
mation on a program for decision purposes. The DSARC Chairman's 
staff distributes this so-called ""for coordination 1 draft 
DCP" to the DSARC principals during the ten working days prior 
to a DSARC. After reviewing the document, DSARC principals 
may submit their comments on the issues to be resolved at the 
DSARC meeting to the head of the sponsoring service and to the 
DSARC Chairman. 

Also on September 9, an internal memorandum within the 
office of Dr. Bennett, Acting Assistant Secretary of Defense 
(I§L) , reviewed the progress of the DCP in terms of the 
requirements that Dr. Bennett had earlier established. The 
memo noted that "None of the milestones were honored by the 
Navy." It went on to say that the Assistant Secretary of 
the Navy for Installations and Logistics had issued a revised 
CONDOR DCP on September 5 which might not reflect the guidance 
on procurement alternatives given to the Navy by the Defense 
Department. In concluding, the memo stated: "We think our 
guidance to the Navy regarding a DCP is clear: no acceptable 
DCP, no DSARC." Not only was the office of the DSARC Chairman 
apparently skeptical of the CONDOR missile, it seemed equally 
skeptical about the Navy's willingness to provide adequate 
and accurate documentation on which to base a production 
decision. 

The following day, on September 10, the Navy's draft DCP 
was received in the office of the DSARC Chairman OASD (I§L) . 
Five days later, on September 15, in accordance with the DSARC 
directive, the OASD (I§L) staff submitted a memorandum to the 
DSARC Chairman outlining what were regarded as the deficiencies 
in the Navy's DCP. 

In strongly worded language, the memo criticized some 
eight points in the DCP. Among them were: (1) Navy failure 
to recognize the Secretary of Defense procurement limitation 
to 805 missiles by including program alternatives calling for 
1,055 or 1,452 missiles; (2) failure to provide detailed quan- 
titative results from the operational evaluation; (3) failure 



48 



to specify objectives and thresholds for the testing of 
CONDOR hardware components, as well as failure to provide 
sufficient performance criteria, objectives, thresholds, and 
demonstrated results; (4) failure to substantiate the claim 
that the CONDOR contractor management problems can be re- 
solved; and (5) failure to address training requirements. 

The memo concluded: 

We have developed and coordinated with 
the OSD staff the attached DCP outline as an 
attempt to correct the DCP deficiencies .. .There 
have been some rumblings back that the Navy has 
already submitted its DCP position. We are try- 
ing to work informally, per your guidance, with 
the Navy to get off dead center. However, it is 
problematical that we will have a revised DCP 
to support a 30 September Condor DSARC III. 

Nevertheless, under the pressures that were accumulating 
to get the CONDOR program into production at all costs, the 
DSARC meeting was held as scheduled. 

SECNAV Review. On September 17, the Navy's CONDOR Program 
Manager briefed the Assistant Secretary of the Navy (I$L) on 
the program and the Navy's position for the DSARC. The brief- 
ing included some mention of a few of the specific points about 
which Admiral Monroe had expressed concern in his operational 
evaluation reports, specifically (1) the acquisition of tar- 
gets at sea; (2) problems in CONDOR'S data link; and (3) pre- 
mature firing of CONDOR'S fuze. 

It noted also that "serious concern" had been expressed 
about (1) degradation of CONDOR's effectiveness as a result of 
its inability to acquire and reach targets in haze or low, 
scattered clouds; and (2) inability to penetrate heavy defenses 
without the aid of decoys, anti-radiation missiles, or electronic 
countermeasures such as jamming. 

It is important to note that, of these five concerns, only 
two (those connected with the data link and the fuze) were 
susceptible of solution through the test and production scheme 
which the Navy would propose to the DSARC. These two were 
basically reliability issues. The matters of CONDOR's ability 
to penetrate enemy defenses and to acquire targets in hazy or 
cloudy weather were much more fundamental and were not solvable 
by simple engineering changes. 

The briefing further discussed several procurement options 
for the CONDOR missile, including the Navy's preferred total quan 



49 



tity of 1,452 missiles, despite an OSD decision limiting 
the Navy to a total inventory of 805 missiles. The signif- 
icance of the different quantities is that, if it were not 
limited to the smaller total purchase fixed by the Defense 
Department, the Navy would have less difficulty achieving its 
"design-to-cost" goal of $305,000 per missile calculated in 
fiscal year 1974 dollars. The Defense Department had turned 
down the Navy's request to purchase more missiles because it 
found that the Navy had not provided adequate justification 
for the additional numbers. 

The Assistant Navy Secretary's briefing did not discuss 
plans for CONDOR deployment in the fleet or the issue of the 
CONDOR warhead size. Nor did it discuss alternative weapons 
for fulfilling the operational requirement and their cost- 
effectiveness as compared with that of CONDOR. In short, it 
did not address issues which had been raised and would con- 
tinue to be raised within elements of the Defense Department. 
These questions were, directly or indirectly, of fundamental 
importance in DSARC III under the terms of Department of De- 
fense Directive 5000.26. (See Appendix 10, pages 5-6 of 
DoD Directive 5000.26 ) 

Early in the following week, Captain Turk of DDR§E 
again visited Rockwell's Missile Systems Division in Columbus 
for another briefing on the CONDOR reliability matter. The 
briefing, apparently for the first time, also addressed the 
survivability of the missile in the high threat environment 
it was intended to penetrate. 

Program Analysis and Evaluation Opposition. On September 26, 
in preparation for the upcoming DSARC, the Office of the Assistant 
Secretary of Defense for Program Analysis and Evaluation (OASD 
(PA$E)) - since eliminated - completed work on a paper on the 
CONDOR based on the draft DCP. The paper was intended to support 
the position of the Assistant Secretary, Mr. Leonard Sullivan, 
recommending the cancellation of the CONDOR program as insuf- 
ficiently cost-effective in a period of severe budget restraints. 
The paper observed that: 

In general, the fundamental issues with 
respect to CONDOR have not changed since last 
fall's firedrills [1974] except for the reli- 
ability and survivability problems highlighted 
during IOT^E [initial operational test and eval- 
uation]. In addition, there are new cost issues 
raised and discussed later in the paper. 

On the main DSARC issues, the PA§E staff paper commented 
that there were four discrepancies or mistakes in the Navy 



50 



calculations of CONDOR costs. It noted further that "...dem- 
onstrated reliability of the CONDOR system is less than de- 
sired. 

The paper reviewed the findings of Admiral Monroe's vul- 
nerability tests, especially as regards a possible requirement 
for penetration aids, and concluded: 

These appear to be the same aids required 
to penetrate to the target with aircraft, so 
that any predicted savings in this area at- 
tributed to the stand-off capability of CONDOR 
might not, in fact, be realized in the opera- 
tional environment. 

The position paper reiterated Admiral Monroe's findings 
regarding the poor reliability of the CONDOR missile and 
guidance pod; it mentioned the fin control problem but acknowl- 
edged this defect involved a "straightforward engineering prob- 
lem solvable at low risk." Also raised was the question of 
CONDOR performance under less than optimal terminal weather 
conditions, e.g. haze or scattered clouds over the target 
area. 

Discussing the issue of CONDOR training, the PA§E paper 
criticized the costlines of the plan to use operational mis- 
siles for training purposes and estimated that one CONDOR a 
day would have to be returned to repair depots for overhaul , 
if then current Navy calculations could be taken at face value. 

Regarding the DCP, the paper commented that the CONDOR 
system had several significant problems that needed to be 
corrected prior to any flight production and that, even if 
all the "fixes" were incorporated under the Navy's plan of 
initially producing five missiles a month, there remained a 
question of the utility of so expensive a weapon. 

The review concluded that the CONDOR was not ready for 
production release, that the CONDOR might not be worthy of the 
additional R§D funding required when costs and operational 
utility were considered, and that the Navy had not satisfac- 
torily and properly prepared for DSARC III. Noting that the 
Assistant Secretary (PA§E) had previously objected to the 
production of CONDOR because of its limited utility and high 
costs and that the operational evaluation had revealed potential 
vulnerability problems, the paper contained a recommendation to 
cancel the CONDOR program outright. 

Looking into the future, the review observed: 



51 



The rationale ... rests on our belief 
that the Navy's tactical air assets should 
have a lesser role in very high threat en- 
vironments in the 1980s. CONDOR is designed 
and planned for employment in such environ- 
ments . 

In addition, we plan... to provide some 
stand-off capability for the Navy in these 
environments. Based on the IOT§E obser- 
vations with respect to survivability, it 
is questionable whether the additional... 
stand-off provided by the CONDOR... is worth 
the additional cost.* 

Advance Briefing. In addition to a pre-DSARC staff 
planning meeting which is provided for in the directive, there 
is also, by custom, a briefing of the DSARC principals just 
prior to the meeting of the DSARC itself to review the sys- 
tem and issues that will be considered at the meeting. This 
is called the "Principals Pre-DSARC Briefing." Such a meet- 
ing was scheduled for the CONDOR on September 29. 

At the pre-DSARC, the Office of the Assistant Secretary 
(I§L) presented an overview of the CONDOR program. Prior to 
this presentation, the DSARC Executive Secretary reviewed 
with the DSARC Chairman the text and slides of the briefing 
the former was to give at the DSARC. In sworn testimony before 
the subcommittee, the Executive Secretary stated that it was 
decided to withhold a slide containing a recommendation for 
termination of the CONDOR program "...because the DSARC proper 
was the place to make decisions, not the pre-brief." 

During the actual September 29 briefing of the principals, 
however, the Chairman requested that the Executive Secretary 
display the slide recommending program termination, from which 
the Executive Secretary inferred that Dr. Bennett was giving 
serious consideration to endorsing such a recommendation in 
the DSARC itself. In his own testimony Dr. Bennett stated 
that he had reserved his decision until the DSARC itself on 
September 30, that he had a number of questions about the 
program and that he permitted the slide showing a termination 
recommendation to stand. 

*It is interesting to note that many of the reasons advanced at 
this time by the Office of Program Analysis and Evaluation for 
questioning the CONDOR program paralleled the reasons given by 
the same office under different leadership seven years before in 
1968 when the Assistant Secretary for Program Analysis and Evalua- 
tion recommended to then Deputy Secretary of Defense Nitze that 
the program be cancelled. (See page 9 ) 



52 



The briefing paper also reviewed: major CONDOR milestones 
in the preceding 24 months, including the DSARC II requirement 
that a "full OPEVAL" be conducted prior to a production decision 
(August 1973) ; a DDR§E recommendation that development of a 
dual-mode seeker for CONDOR be cancelled (June 1974); and an 
Air Force finding that it had no requirement for CONDOR because 
it could not fulfill Air Force needs in terms of (1) an extended- 
range data link, (2) a turbojet rather than rocket engine, 
(3) a dual-mode guidance system, and (4) an alternate warhead 
selection (June 1975) . 

The paper also summarized the COMOPTEVFOR assessment of 
CONDOR, noting that its operational effectiveness was good 
against land targets and moderately good against sea targets, 
PROVIDED that enemy defenses could be penetrated and that the 
target could be acquired in haze or with low, scattered, clouds, 
provisos that were to form much of the basis for OSD skepticism 
about CONDOR effectiveness. COMOPTEVFOR' s findings in regard 
to firing performance, reliability, and operation suitability 
were also reviewed, with special reference to the unsatisfactory 
finding regarding the missile's pod and the recurring fin con- 
trol problem. 

Under the heading "CONDOR Program Uncertainties" the paper 
stressed the issues of missile effectiveness in the high threat 
environment for which it was designed, its low reliability, the 
lack of definition of the operational training program for the 
CONDOR, poor quality management by the CONDOR contractors and 
the requirement to redesign the missile's line test set, a 
piece of equipment fundamental to achieving the "all-up round" 
objective . 

At greater length, the paper addressed various CONDOR 
production schedules proposed by the Navy and OSD, as well as 
the issues of CONDOR penetration, reliability, training, cost, 
production readiness, the DCP status. After reviewing the 
DSARC III issues (see page 27 ), the presentation recommended 
termination of the CONDOR program on the basis of questionable 
effectiveness, obsolescent technology, lack of an adequate tech- 
nical demonstration, ill-defined reliability and maintainability 
requirements, and a questionable support plan for the CONDOR. 
The paper found the CONDOR program unsatisfactory on five of 
the six items reviewed (penetration, reliability, training, 
cost, production readiness, and DCP status). Only on the nar- 
row issue of production readiness did the paper make the qualified 
judgment that "An initial low-rate production period followed by 
a production reassessment is warranted." 

The question of production readiness, however, cannot be 



53 



treated separately from the weapon's basic ability to perform 
its mission at an acceptable cost. Yet severe doubts remained 
on these points, leading to the recommendation to terminate 
the program and to initiate a joint service (Navy and Air Force) 
program to develop a stand-off weapon to meet the operational 
requirement. Such an approach would permit the services to 
capitalize on the technological lessons learned from the CONDOR 
program and perhaps to use some of its hardware to fashion a 
more capable and lower cost system for joint use. Perhaps less 
concerned than the Navy about its immediate need for a dam- 
busting missile, some elements of OSD appeared to believe that 
a first-rate system at a later date was wiser and ultimately 
more economical than a less capable system in the near future. 

The DSARC Chairman, Dr. Bennett, expressed the choice in 
testimony before the subcommittee: 

In my mind the questions resolved itself down to 
whether or not you wanted to have these missiles to 
meet the urgent Navy requirement, recognizing that 
you were using technical things that could be updat- 
ed or whether or not you wanted to delay the program 
for four or five years to use better technology. That 
was the kind of decision that we had . . . 

Then the question came down to whether or not we 
should buy a few of these for inventory or whether we 
should terminate that program, capitalize on what we 
knew and expect to get a delay of four or five years 
in having this kind of missile in the inventory of the 
Navy. 

Dr. Bennett's testimony and the draft action memo- 
randa prepared with his guidance after the DSARC further 
reflect his reservations concerning the urgency of the 
Navy's stated requirement, which, at the time of the DSARC, 
was over a decade old. Mr. Sullivan, Assistant Secretary 
for Program Analysis and Evaluation, whose staff had pre- 
pared lower cost options to meet the requirement (see above) , 
had even stronger reservations about the urgency of the re- 
quirement. He commented after the DSARC that "It is a prime 
candidate for cancellation if budget restrictions persist," 
and told the subcommittee that: 

I believed that, if the Navy were to be permitted 
to take the CONDOR missile into their operational in- 
ventory 3 it should be done on the basis of a special- 
ized weapon which only a few aircraft should be equip- 
ped to drop and a few pilots trained to operate... 

...I, in essence, felt that, if the CONDOR were to 
enter the inventory at all s it should enjoy the cate- 
gory, say, of a silver bullet, [emphasis added] 



54 



The Navy's Preferred Program 

The Navy's position for the September 30 DSARC was 
developed in a series of August meetings (see above) and 
formally promulgated in a memorandum dated September 3, 
1975, from the Office of the Chief of Naval Operations. 
Choosing from among three options for a production sched- 
ule, the Navy favored the third option, a plan that ini- 
tiated production in December of 1976 and held production 
down to no more than five missiles per month for seven 
months until First Article Acceptance Tests (FAAT) and the 
demonstration of production reliability (REL DEMO) were 
complete. In the eighth month of the plan, production 
would rise to 12 missiles and, by the end of that month, 
Follow-on Test and Evaluation (FOT$E) would be completed. 
Thereupon, the production rate would increase to 23 mis- 
siles per month, subsequently dropping to a sustained rate 
of 20 per month. 

In making the presentation for the Navy to the DSARC, 
however, the CONDOR Program Manager addressed the other 
alternatives which the Navy had considered and discussed 
the advantages of each. Both of the other alternatives 
called for production to begin at a low rate, with the 
first option calling for a slow increase to 20 missiles 
per month after the ninth month while the second ( and 
most conservative) called for production to remain at 
five missiles per month for the first 22 months of pro- 
duction, rising to 18 per month only in the 24th month of 
production. All three options appeared to provide for a 
low initial rate while customary follow-on production re- 
liability tests were conducted. The most conservative 
option involved stretching out procurement at a low rate 
well beyond the normal testing and incurred the cost in- 
flation that is usual with stretch-outs of procurement 
programs . 

The Navy felt, however, that it could justify its 
preference for the third option, which called for a low 
production rate for the first seven months and which the 
Program Manager characterized to the subcommittee as "...a 
conservative program with the necessary safeguards." 

In the DSARC, then, the Navy was to argue that the 
system was ready for production because there was a reas- 
onable expectation that it would, in time, meet the pro- 
duction line reliability goals, that it would overcome 
test failures, and that an "all-up round" was feasible 
given a certain amount of experience in serial production. 

Although the Navy may be judged premature in request- 
ing a production decision from the DSARC when deficiencies 
revealed in the CONDOR operational evaluation were still 
being solved and the solutions being tested, it nevertheless 



55 



had presented a preferred plan and two options all of which 
called for a low initial production rate and a series of 
tests and demonstrations prior to entering full-scale, rate 
production. The presentation made by the Program Manager 
at the DSARC would appear to contradict the testimony of 
the Director of Defense Research and Engineering that 
"...the Navy came to that DSARC and did not present any 
plan other than to go into full production." The Navy's 
plan also called for First Article Acceptance Tests, re- 
liability demonstrations, and Follow-on Test and Evaluation 
(all of which are, in greater or lesser degree, normal com- 
ponents of production certification activities) , seeming 
to belie Dr. Currie's contention before the subcommittee 
that insufficient attention had been given to planning for 
such tests. It does not appear, then, that the Navy's 
request was for an unqualified full-scale production de- 
cision or that the Navy had completely neglected to pro- 
vide for tests of the missile's production reliability. 
Moreover, the CONDOR Program Manager testified to his ex- 
pectation that the DSARC would recommend an approach some- 
what more conservative even than that of the Navy's, which 
is common practice for DSARC meetings. 



56 



THE DSARC DELIBERATIONS 



On September 30, at the Navy's request and in spite of 
continued misgivings about the CONDOR'S readiness to face a 
DSARC Review, the DSARC meeting was held. Following the pre- 
sentation of the Navy's CONDOR Program Manager and reports by 
the Chairman of the Cost Analysis Improvement Group (CAIG) 
and the Deputy Director of Defense Research and Engineering 
for Test and Evaluation (DD T$E) , the system's overall merits 
and defects were reviewed. 

Testimony from each of the principals before the sub- 
committee disclosed that, going into the September 30 DSARC 
meeting, each had reservations concerning the program. Each 
principal testified to his impression that there was agree- 
ment that the program was not ready to enter into production, 
although different reasons were stressed as the basis for this 
assessment of CONDOR'S readiness. 

Former Assistant Secretary for Program Analysis and Eval- 
uation Leonard Sullivan characterized his position to the sub- 
committee as follows: 

I believed that if the Navy were to be permitted 
to take the CONDOR missile into their operational in- 
ventory, it should be done on the basis of a special- 
ized weapon which only a few aircraft should be equip- 
ped to drop and a few pilots trained to operate... I, 
in essence, felt that if the CONDOR were to enter the 
inventory at all, it should enjoy the category, say, of 
a silver bullet. 

Then-Acting Assistant Secretary for Installations and 
Logistics, Dr. John Bennett, testified that he had made no 
tentative conclusion but that he wanted answers to the many 
questions that had been raised about CONDOR'S readiness, 
saying : 

...the decision that I had was to attempt through 
my questioning to raise the issues and see that adequate 
information was provided, so that the principals and my- 
self would have the benefit of all information prior to 
making that kind of decision (to produce the CONDOR mis- 
sile). ..I raised the question, and I put it very bluntly 
that the question be raised and whether or not this pro- 
gram should be terminated or not and asked the Navy what 
their response to that particular question was. 

Then there were other questions concerning the effec 
tiveness and so forth. There were about four areas 
that my staff felt that I should probe deeply into which 
I attempted to do so. 



57 



Former Assistant Secretary of Defense (Comptroller) 
Terence E. McClary told the subcommittee that he had con- 
sistently supported the requirement for the CONDOR system 
but that he had several reservations about the missile and 
the program, particularly of a budgetary and cost-effective- 
ness nature, and that his "...preference was to move ahead 
in a forthright manner and not to stretch the program out 
year after year after year but get on with it, take appro- 
priate risk and get on with the program." 

However, in the matter of moving ahead I have al- 
ways consistently looked for assurances that the 
moving ahead would be in an orderly fashion and 
that appropriate milestones would be achieved. 

The Director of Defense Research and Engineering, 
Dr. Malcolm Currie, held that: 

My preliminary position, based on the work my staff 
had done prior to the DSARC, and subject to any fur- 
ther information that the Navy would present there, 
was that the program was not ready for production, 
and I opposed putting it into production. 

The formal DSARC began, then, in an atmosphere of 
doubt about the system's readiness to enter production. 
A decision by the DSARC principals to recommend immedi- 
ate production authorization to the Secretary or Deputy 
Secretary was clearly not indicated. All of them recalled 
that they had either opposed or entertained serious res- 
ervations about allowing CONDOR to enter production, even 
at the limited rate that the Navy had recommended in what 
the Program Manager told the subcommittee was a "conser- 
vative program" for production. 

Normally, the decisions issuing from a DSARC meet- 
ing are arrived at by consensus. No formal votes by 
DSARC principals are taken and none are provided for in 
the applicable directive. 

The issue, therefore, became one of determining what 
to recommend to the Secretary in terms of the future of 
the CONDOR program, in view of the Council's rejection 
of the Navy's recommendation. Though there appeared to 
be general agreement that a production authorization 
could not be supported, there was little evident agree- 
ment as to what should occur, beyond the consensus that 
CONDOR would have to satisfy a number of requirements 
before production could legitimately be considered. 



58 



Although it is normal practice to hold an Execu- 
tive Session of the DSARC principals to resolve such 
issues immediately following the service's presenta- 
tion, the testimony given to the subcommittee on what 
was discussed at this session immediately following 
the Navy presentation on September 30th is vague. In 
any case, it is clear from the testimony and from sub- 
sequent draft action memoranda that September 30th 
ended with either little common understanding of where 
the program was to go or with considerable misunder- 
standing as to what constituted an appropriate course. 



5<l 



THE CONDOR ACTION MEMORANDUM, OCTOBER - NOVEMBER 1975 



That there would be a slow-down in the CONDOR de- 
velopment program was implicit in the agreement of all 
DSARC principals not to recommend a production author- 
ization on September 30, 1975. In the absence of such 
a recommendation, the program was necessarily slowed. 
It would remain in advanced engineering development, 
since production plans and contracts hinged on ob- 
taining DSARC approval to move forward into the pro- 
duction phase. Indeed, the question of slowing down 
the program was not, per se , a central issue among the 
OSD elements involved in the decision process. It 
was reflected only implicitly in the draft action mem- 
oranda that were developed following the DSARC meet- 
ing, as a necessary result of witholding production 
approval . 

The central issues remained, rather, whether the 
system should go into production at all and, if so, 
what questions needed to be answered before produc- 
tion could be recommended to the Secretary or Deputy 
Secretary of Defense. 

Some saw reliability as the only remaining ques- 
tion and defined the issue only in terms of readiness 
for serial manufacture. Others believed that the broad- 
er questions of cost-effectiveness, missile vulnerabil- 
ity, adequacy of test efforts, and logistics support 
during deployment had not been satisfactorily answered. 
The fate of the CONDOR program, then turned not on a 
slow-down, to which all agreed--but on which questions 
needed answering and on how they should be answered. 
A determination of these issues would dictate how much 
longer the program would be retained in advanced engi- 
neering "development. 

Of critical importance to an understanding of these 
issues are (1) the various positions taken by the DSARC 
principals after September 30th, (2) their reasons for 
adopting these positions, and (3) the actions they took 
in consequence of these positions. These positions are 
reflected in a series of memos proposed for Deputy Sec- 
retary Clements' signature. 

The subcommittee was provided an opportunity to re- 
view the contents of seven of these draft action memo- 
randa which are listed below, together with information 
on the date and drafter as indicated on the memos: 



77-936 O - 7( 



60 



1. Chairman's draft 



2. Chairman's draft 



3. DDRSE draft 



Prepared in OASD(I£L) on October 
2, 1975 by the DSARC Executive 
Secretary, Ronald Thomas 

A copy of a carbon of the above 
draft bearing a notation that it 
was concurred in by the Assistant 
Secretary (PA$E) , Mr. Sullivan 

Prepared in DDR§E on October 3, 
1975 by Mr. Gerald Cutlar, in the 
Air Warfare section, as an alter- 
native to the Chairman's draft 



Dr. Currie draft 



A rough draft with a note attach- 
ed stating: "This is believed to 
be an implementing memo prepared 
in ODDRSE after the DSARC Exec 
session of 14 Oct. It has some of 
the words of the 3 (sic) Oct. I§L 
draft. It has Dr. Currie's hand 
editing. It was typed in clean 
version and subject of Mr. Sulli- 
van's note of Oct. 16th." 



5. Draft with dis- 
claimer by Mr. 
Sullivan- 



A slightly altered version of the 
above draft with a note from Mr. 
Sullivan to Dr. Currie dated Oct- 
ober 16th. 



Draft with 
OASD (UL) 
changes - 



Another copy of the 'above draft 
with changes desired by Dr. Ben- 
nett'soffice and a notation that 
it was returned to Dr. Currie on 
October 17th. 



7. Final draft- A draft similar to #5 and #6 but 

incorporating certain changes 
apparently desired by Dr. Bennett's 
office; virtually identical to 
final version signed by Deputy 
Secretary Clements. 

Though at times subtle, the differences and changes be- 
tween these drafts are significant in what they disclose a- 
bout the positions of the DSARC principals and the points of 
discussion among them. In the absence of any clear recollec - 
tioniibout these matters on the part of the principals in test- 
imony before the subcommittee, the draft memos provide a docu- 
mentary guide to a critical period in the life of the CONDOR 
program. 



61 



Position of the DSARC Chairman . Based on guidance which 
he testified was given to him by the DSARC Chairman, the Ex- 
ecutive Secretary circulated on October 2 a draft action mem- 
orandum for concurrence and comments by the other DSARC prin- 
cipals. This October 2 draft, approved by the Chairman and 
subsequently concurred in by the Assistant Secretary for Pro- 
gram Analysis and Evaluation, contained several points: 

1. Production Decision . It stated that the CONDOR 
was not authorized for production and would remain in en- 
gineering development until systems reliability had been 
adequately demonstrated. It further noted that "serious 
reservations" existed about the program's readiness for 
production in terms of reliability, deferred pre-produc- 
tion testing, logistics support planning and missile vul- 
nerablility. 

2. Engineering Development Plan. It required the 
Navy to provide by the first of December for OSD approval 
a plan for continuing the system's engineering develop- 
ment, with the objective of assuring that necessary im- 
provements had been identified, that reliability require- 
ments had been proven in laboratory and flight tests, and 
that missile effectiveness had been evaluated. Two op- 
tions were provided for obtaining the necessary missiles 
for the tests. 

3. Production Planning and Contract. The Chair- 
man's draft memo permitted consideration of production 
planning only in terms of scheduling the release of long- 
lead-time items and required that emphasis be given to 
minimizing production related expenditures until after 

"a significant portion of the required test activities" 
had been completed and reviewed by OSD. 

4. Test and Evaluation. The memo required that the 
Navy submit to OSD a detailed test and evaluation plan by 
the first of December, a plan which would clearly identify 
test objectives and evaluation criteria for all tests, 
since there was concern that these had not been adequate- 
ly specified in expressing earlier test results. 

5. Vulnerability / Penetrability . The draft memo 
required the Navy^ to evaluate CONDOR'S vulnerability to 
enemy air defense's and countermeasures , suggesting that 
this study should be augmented by considering what meas- 
ures could improve CONDOR'S ability to get past defenses 
to its target. 

6. Integrated Logistics Support Plan (ILSP) . An up- 
dating of the ILSP was required, together with its submission 
to the Assistant Secretary (I§L) , the Chairman, for review 
and approval. 



62 



In addition, the draft memo prepared in the Chairman's 
office contained other, less significant provisions relating 
to the reprogramming of necessary funds and updating the Deci- 
sion Coordinating Paper (DCP) for submission to the ASD(I§L) 
by the first of December. 

This draft decision memorandum gave the CONDOR program a 
temporary but very qualified lease on life. It reflected the 
concerns evidenced prior to and during the DSARC about actual 
or potential CONDOR defects and gave the Navy a final oppor- 
tunity to demonstrate that these concerns were groundless. It 
sought definitive information on reliability improvements, addi- 
tional data on missile vulnerability, a set of clearly stated 
test objectives and evaluation criteria, and an up-to-date log- 
istics support as well as a complete Decision Coordinating Paper. 

This memorandum is of special significance in several 
other ways: (1) it represents the approved views of the DSARC 
Chairman, and the Assistant Secretary for Program Analysis and 
Evaluation; (2) it represents the DSARC Chairman's impression 
of the consensus expressed at the DSARC; (3) it provides a 
standard with which all subsequent drafts can be compared; and 
(4) it provides a standard for judging the source of the views 
which ultimately appeared in the action memorandum finally signed 
by Deputy Secretary Clements on November 4, 1975. 

In testimony before the subcommittee, Dr. Bennett and Mr. 
Sullivan acknowledged that they agreed with the position ex- 
pressed in the October 2 draft; Mr. McClary was unable to re- 
call having seen it; and Dr. Currie stated that he "opposed 
certain parts of it." Dr. Currie further testified that he 
asked a staff aide "...to prepare a draft which had exactly the 
same thrust as this, that is, that the CONDOR was not ready for 
production. " 

DDR£E Draft. Dr. Currie testified as to his reason for 
directing the preparation of a DDR§E draft memorandum: 

What I was trying to avoid was a situation where we 
had to produce more missiles to do the further testing, and 
in particular, I was looking for a plan whereby we could take 
the existing assets -- there were some 10 or a dozen missiles 
left in inventory -- to put in the fixes. There was a new 
fin actuator that had to be put in. There were some ball 
bearings that had to be corrected in the gyros, and I want- 
ed a plan whereby we could use those missiles for any fur- 
ther testing without incurring the expense of the government 
producing 15 or 20 missiles more for the testing, as sug- 
gested in the October 2 memorandum you just showed me. 



63 



Dr. Currie also testified that, after the DSARC , his 
concern was "Primarily reliability, and to some extent 
management ... as distinguished from basic performance of 
the system, technical performance."* 

The draft which the Directorate of Defense Research 
and Engineering prepared at Dr. Currie' s request and with 
his guidance was circulated on the following day, October 3. 
It differs from the Chairman's draft in several important 
aspects : 

1. Production Decision. The DDR§E draft contained no 
mention of the fact that a production decision had been denied 
Instead, it stated that the Navy's tests were to be completed 
by February 1, 1976, after which "...a DSARC IIIB would be 
held to consider a low rate (five per month) production go- 
ahead." The draft spoke of "some concern" about certain 
CONDOR issues at the DSARC. 

2. Engineering Development Plan. The DDR§E draft had 
no such requirement. 

3. Production Planning and Contract. This draft estab- 
lished that , if approved, low rate production for the CONDOR 
would continue through the completion of the scheduled tests, 
including First Article Acceptance Tests (FAAT) , reliability 
tests, and Follow-on Test and Evaluation (FOT^E) on about 
April 1, 1978, at which time the program would again be re- 
viewed for approval of "...a sustained production rate of 
about 20 per month." This draft contained no provision 
similar to that in the Chairman's draft which directed the 
Navy to minimize production-related expenditures until a 
significant portion of the tests were completed. The DDR§E 
draft did contain a section that required Navy planning for 

a production contract to "...include automatic execution of 
appropriate options if unsatisfactory performance by the con- 
tractor occurs in schedule, cost or system performance." This 
was to be in lieu of renegotiating the contract in the event 
of performance shortfalls. The Chairman's draft made no men- 
tion of a production contract since it considered that no 
production was necessarily foreseen. 

4. Test and Evaluation. The DDR§E draft contained no 
provisions similar to those in the Chairman's draft calling 
for the Navy to prepare and submit a detailed test and 
evaluation master plan setting forth test objectives and 
evaluation criteria. 



*Interestingly , Dr. Currie also testified that he received 
a call from Dr. Reagan, President of Rockwell's Missile Systems 
Division, in mid-October in connection with the CONDOR quality 
assurance program. Dr. Bennett, the DSARC Chairman and pre- 
sumably the person to whom such information would be addressed, 
testified that he had no contact with Rockwell Missile Systems 
Division personnel in this period. 



64 



5. Vulnerability/Penetrability. The DDR$E draft stated 
that "Appropriate studies should be initiated immediately to 
quantify the vulnerability to interceptor and ground air 
defenses both with and without penetration aids." It added 
that such a study would be expected to be completed in time 
for the February 1 DSARC 1 1 IB anticipated in the memo, but 

it did make both the study and its deadline a voluntary or 
optional matter, not an absolute requirement. 

6. Integrated Logistics Support Plan. The DDR§E memo 
repeated verbatim the parallel requirement in the Chairman's 
draft of the day before. 

In addition, the DDR§E draft of October 3 contained three 
minor items relating to budget changes, budget shortfalls, and 
training requirements which were not separately addressed in 
the Chairman's draft; it duplicated the provisions in the 
Chairman's draft regarding the reprogramming of funds and the 
revision of the DCP. None of these items, which were primarily 
administrative in nature, bore directly on the issue of the 
future of the CONDOR program. 

The major difference from the Chairman's draft was that 
the DDR§E version established a definite program leading, by 
fixed dates, from low-rate production (five missiles per month) 
to a sustained production rate of about 20 per month. In order 
to receive authorization for production, the Navy had only to 
complete the tests then underway or to conduct those then 
contemplated. The memorandum did not address what objectives 
the test results had to meet and about their review by the 
Office of the Secretary of Defense, in contrast to the require- 
ments of the OASD (I$L) draft memo. Likewise, in regard to 
the questions raised in the DSARC about training and operational 
support requirements, the memo merely called for resolution of 
these problems and the inclusion of proposed solutions in the 
appropriate documents, without requiring the solutions to meet 
any standards or to be reviewed by OSD. 

The draft action memorandum prepared in DDR§E required 
specifically that no new prototype missiles be produced for 
the purpose of the testing program. It required that the 
existing prototypes be used for these tests. The Chairman's 
memo, by contrast, had provided two alternatives for these 
tests: (1) use of the existing prototypes to incorporate 
"fixes" or (2) production of 15-20 additional prototype mis- 
siles with the necessary fixes incorporated. 

By making the first of the two options provided in the 
Chairman's memo an absolute requirement, the DDR§E memo avoided 
the slow-down that would necessarily eventuate from waiting for 
the additional prototype missiles to be manufactured. The 



65 



requirement that the existing prototypes be used also had 
an impact on the subsequent testing, since many of the 
failures experienced therein were attributed to using pro- 
totypes which had already been subjected to lengthy tests 
and did not represent production line quality. 

Although the second option in the Chairman's memo (to 
buy an additional 15-20 missiles for test purposes) would 
have increased the government's liability in the short run, 
it would have necessarily extended the evaluation phase, 
allowed for fuller testing, delayed the production decision, 
and avoided incurring the larger government liability that 
results from expensive engineering design changes made to 
an unready system after it is in production. 

Moreover, if Dr. Currie's objection to buying additional 
missiles, as stated in his testimony, was his sole reason for 
rejecting the Chairman's memo, he did not need to have an 
alternative draft prepared. Instead, he needed only to request 
of Dr. Bennett that the memo be revised to eliminate the 
second option and to direct the Navy to use the existing pilot 
production missiles. 

Summary of Differences 

1. Production Decision. The Chairman's memo clear- 
ly stated that production was not authorized and that the 
program would remain in the advanced engineering develop- 
ment status until "serious reservations" could be overcome. 
The DDR^E draft, on the other hand, did not address the 
issue of a production authorization but provided that the 
Navy's preferred initial production of five missiles per 
month would be considered again as early as February 1, 
four months away, after the Navy completed its series of 
tests already underway. 

2. Engineering Development Plan . Since it envis- 
ioned a production decision as soon as four months away, 
the DDR§E draft did not require the Navy to submit a plan 
for keeping the system in engineering development. In- 
stead, it called upon the Navy to complete the normal 
tests then underway or planned for the near future and it 
opened the door to a low-rate production decision on Feb- 
ruary l . 

3. Production Planning and Contract . The Chair- 
man's draft required that production-related costs (for 
long lead items) be minimized until test results were 
available; the DDR$E draft contained no similar limitation 
on government investment. Additionally, the Chairman's 



66 



memo permitted only that minimum long lead time produc- 
tion planning essential to keeping the door ajar, the DDR^E 
memo provided extensive direction for further production 
planning and contract clauses, including provisions for 
entering sustained rate production about April 1, 1978. 
This latter provision is of especial interest since it 
delays sustained rate production by only two months from 
the Navy's original preferred option. While the Navy 
planned to begin producing 20 missiles per month in Feb- 
ruary 1978, the DDR§E plan would authorize production at 
this rate only in April 1978. Of equal significance is 
the fact that, by scheduling a DSARC 1 1 IB on February 1, 
1976, and assuming a favorable decision, the DDR$E memo 
would have allowed the Navy to write contracts that would 
begin initial low rate production (5 per month) in Dec- 
ember 1976. 

The Chairman's memo, therefore, would have slowed the 
CONDOR program by requiring that the system remain in ad- 
vanced engineering development for an indefinite period 
until satisfactory test and evaluation results had been 
presented to OSD and reviewed in terms of the system's 
readiness for production. Additional delay would have 
resulted from implementation of the option to produce 15-20 
more missiles for testing, an option the DDR§E memo deleted. 

The DDRSE memo, on the other hand, actually sche- 
duled the Navy's sought-after low-rate production deci- 
sion in February 1976, in time to preserve the integrity 
of the Navy's original program. It can be said to have 
slowed the Navy's schedule only in one instance-- that 
is, by slipping full-rate production from February 1978 
to April 1978. 

In terms of the issues of studies and tests, the 
differences in the two drafts are also significant. The 
Chairman's memo required both a vulnerability study and 
the establishment of definite test objectives and eval- 
uation criteria for further CONDOR tests, while the DDRSE 
memo made the vulnerability study voluntary and remained 
silent on test objectives and evaluation criteria. Nor 
did the DDR§E memo contain any of the additional and strict 
requirements of the Chairman's memo regarding the process 
for demonstrating the CONDOR'S reliability and effective- 
ness, for reporting the test plans and results to OSD for 
review, and for achieving successful results. The DDR$E 
memo lacks language relating to adequate, satisfactory or 
successful demonstrations. It requires the early comple- 
tion of procedures already scheduled by the Navy and does 
not address whether they should be submitted for review or 
whether they should be successful in their results. The 
Chairman's memo on the other hand, establishes require- 
ments for additional and specific tests and contains lan- 
guage as to the necessity for adequate, satisfactory or 
successful outcomes. 



67 



These two draft memos make it clear that there was 
a considerable gulf between the two offices which pre- 
pared them as regards the CONDOR. The memo circulated 
for concurrence by the Chairman reflects deep-seated 
skepticism about the ability of CONDOR to overcome suc- 
cessfully its several defects. It therefore holds to a 
minimum any production planning, contract planning, or 
government financial liability until the CONDOR program 
has satisfactorily demonstrated that it can meet all of 
the criticisms levelled against it in the DSARC. 

The DDR^E memo, however, acknowledges only that, 
for reliability reasons, the CONDOR is not quite ready 
for production and proceeds virtually to replicate the 
basic test program and production schedule developed by 
Rockwell, postponing by only four months the final ap- 
proval to commence the requested low-rate production. 
In an October 27 weekly report, Rockwell's P.G. Paraskos 
wrote to Missile Systems Division President J.F. Reagan: 
"ODS is staffing the final directive for the Secretary of 
Defense signature. .. It is also significant that this was 
the original kind of program that was discussed last June 
and July in properly estimating the award, sales and prof- 
its for Condor." 

The DDR$E memo also mentions "some concern" expressed on 
issues at the DSARC but merely suggests that the Navy 
look into the central issue of CONDOR'S vulnerability to 
enemy defenses. 

As noted, Assistant Secretary Sullivan concurred in 
the Chairman's draft on October 3. Asssistant Secretary 
McClary, according to his testimony, concurred instead in 
the DDR§E- draft on October 8. From the time the two dis- 
parate drafts were first circulated on October 2 and 3 
until the middle of the month, the points of difference 
were debated and discussed, witnesses testified, but such 
new drafts as may have been developed in this period were 
not made available to the committee for review. 

At this early stage of the discussions, Rockwell 
already seemed to have a good channel of communications 
to OSD, and also seemed to have an impression that things 
would work out well for the CONDOR program. On October 
6, MSD Marketing Vice President P.G. Paraskos wrote to 
MSD President J.F. Reagan: 

MSD is working with appropriate Navy/OSD per- 
sonnel to counter the negative thrusts made by 
COMOPTEVFOR (Admiral Monroe) to properly pre- 
sent all the information on reliability, quality 
control, inspection, training, etc., to permit 



68 



the long lead production program with the nec- 
essary test and evaluation to assure a reliable 
production effort. The probate outcome will 
be a follow-on test and evaluation with a low 
rate initial production which will ultimately 
provide a full production program. 

As will be seen, the company had a remarkably good 
understanding of an outcome that would not be finalized for 
nearly another month, although at that point, only one of 
the four OSD offices concerned - DDR§E - had documented 
its support of this plan. 



69 



DSARC Executive Session of Mid-October 

On or about October 15, according to testimony, 
Dr. Currie convened an executive session of the CONDOR 
DSARC, apparently in an effort to resolve the differences 
and to expedite the forwarding of an action memorandum to 
the Deputy Secretary.* According to Dr. Bennett's testimony 
concerning this meeting, he had with him a draft action 
memo prepared by the DSARC Executive, Mr. Ronald Thomas, 
and Dr. Currie had a draft memo prepared by Mr. Charles E. 
Myers, Jr., Assistant Director for Air Warfare in Dr. Cur- 
rie' s office. It is unclear whether the memo Dr. Bennett 
and Dr. Currie discussed at this meeting was among those 
reviewed by the subcommittee. 

Dr. Currie' s efforts in calling this meeting, and from 
this point forward in attempting to arrive at a consensus 
position, are particularly unusual in light of Dr. Sullivan's 
testimony to the effect that agreements had earlier been made 
that artificial consensus would not be desirable. Dr. 
Sullivan stated: 

We -had sometime prior to that come to 
the conclusion that there was no way in which 
the DSARC principals could always come up with 
a unanimous verdict. In fact, it was an un- 
desirable thing to do, because in fact the 
decisions are made by the Deputy Secretary of 
Defense Clements, and if there was a dis- 
agreement between the principals who attended 
the DSARC meetings, we felt very strongly that 
he should be aware of those differences so that 
he in fact could make an independent decision 
rather than simply rubber stamp a compromise 
that had already been made. 

At this meeting, some progress was apparently made in 
compromising the unsettled issues between the DSARC Chairman 
and the DDR§E. In a draft memo apparently prepared just be- 



*Dr . Bennett and Dr. Currie recalled attending such 
a meeting, whereas former Assistant Secretaries McClary and 
Sullivan could not, in testimony before the subcommittee, 
suggesting the possibility that only Bennett and Currie 
were present. However, Dr. Bennett stated that he chaired 
the meeting, that it had been convened as a result of a 
telephone conversation between himself and Dr. Currie, and 
that Mr. McClary and Mr. Sullivan did attend. 



70 



fore or just after this Executive Session and containing 
editing in Dr. Currie's own hand (editing which he identified 
for the subcommittee) , the disagreements existing between 
earlier drafts were overcome by the inclusion of elements 
from both of the early October efforts. This draft contained 
provisions as follows: 

1. Production Decision. This draft (#4) observed that 
the DSARC had revealed "concerns" about missile reliability, 
pre-production testing, logistics support planning and vulner- 
ability and stated that "A full production go-ahead will not 
be authorized until I (Deputy Secretary of Defense, for whom 
the memo was being drafted) am satisfied that these issues 
have been adequately corrected." 

2. Engineering Development Plan. Further, this draft 
contained no requirement to keep the CONDOR in advanced 
engineering development and hence no requirement for the 
Navy to submit a plan for this purpose. It did, however, 
require the Navy to provide by Decemberl a plan for 
correcting "...the primary program and system deficiencies 
illuminated by the DSARC." The requirements of this plan 
were similar to those set forth in the Chairman's October 

2 draft. 

3. Production Planning and Contract. The plan required 
of the Navy in the draft edited by Dr. Currie was to contain 
pre-production activity which could "...provide necessary 
material support for an initial production rate of 5 missiles 
per month." In addition, it required development of a 
production plan "...wherein contractual provisions and com- 
mitments are oriented to the accomplishment of goal rather 
than calendar milestones." It called for a ceiling of $10 
million on government "exposure" to commitments for long- 
lead time materials facilities until accomplishment of mis- 
sile testing had been provided by the Deputy Director for Test 
and Evaluation, a subordinate of Dr. Currie. 

4. Test and Evaluation. In this respect, the memo 
repeated the language of the Chairman's October 2 draft. 

5. Vulnerability/Penetrability. Here again the mid- 
October draft reflected the Chairman's draft. 

6. Integrated Logistics Support Plan. This provision 
was the same as that contained in the two early October drafts 
with the exception that Dr. Currie had crossed out the require 
ment to submit the ILSP to the Assistant Secretary for Instal- 
lations and Logistics, Dr. Bennett. Likewise, in the mid- 
October draft, Dr. Currie crossed out a similar requirement 
that had appeared in the earlier drafts directing the Navy 

to submit its revised Decision Coordinating Paper (DCP) to 
I)r . Bennett . 



71 



The most significant feature of this draft was a para- 
graph which Dr. Currie himself added at the end in his own 
handwriting, as follows: 

Following successful completion of the 
above actions, including the additional re- 
liability demonstration program, the Navy- 
will be authorized to proceed into limited 
production in accordance with the plans set 
forth in the DSARC review. 

In other words , the program was not retained in advanced 
engineering development, production planning and activity 
for the Navy's requested initial rate of five missiles per 
month was authorized, and the Navy was given an automatic 
go-ahead to implement the plan it had presented at the 
DSARC, once the reliability problems the Navy was then 
resolving were cleared up and the additional tests were 
completed. 

This draft also contained language similar to that in 
Dr. Bennett's original draft regarding limitation of production 
expenditures until completion and OSD review of a significant 
portion of the test activities. Specifically, the draft 
edited by Dr. Currie placed a dollar limitation of $10 million 
on "government exposure relative to commitments for long-lead 
time materials and facilities." It narrowed the test activities 
however, to "testing of refurbished missiles" only and in place 
of the more inclusive requirement for OSD review, it substituted 
"until certification of accomplishments ... has been provided by 
the DD(T§E) ." 

This draft (#4) also contained a variation from the one 
prepared earlier in DDR$E on October 3 (draft #3). The earlier 
draft had mentioned that following completion of the Navy's 
test schedule on the initial production missiles, anticipated 
about April 1, 1978, a third DSARC III review would be held 
(DSARC IIIC) for release of the program to a sustained produc- 
tion rate of about 20 per month. 

The later draft edited by Dr. Currie, however, deleted 
both the mention of a DSARC IIIC and the date. Instead, it 
directed the Navy to develop "a production plan wherein con- 
tractual provisions and commitments are oriented to the ac- 
complishment of goals rather than calendar milestones." This 
change permitted the Navy to go ahead with its program as 
rapidly as it could complete its test schedule, without inter- 
posing the necessity for an additional DSARC review. 

Again, the internal Rockwell correspondence between 
P.G. Paraskos and J.F. Reagan demonstrates that Rockwell had 
knowledge of the discussions then taking place within OSD, and 



72 



that the program proposed by DDR§E was similar to that ad- 
vocated by Rockwell. In the October 20 letter, Mr. Paraskos 
wrote : 

MSD is assisting Navy and OSD decision- 
makers to promulgate a directive that does 
call for an optimum Condor decision with 
necessary follow-on test and evaluation and 
initial long lead low rate production, 
[emphasis in original] 

This proposed memorandum edited by Dr. Currie reflects 
some of the elements of both positions. Though it did not 
halt the steady movement of the program toward a favorable 
production decision on the Navy's terms or retain it in 
advanced engineering development status, it did incorporate 
several of the cost limitation and test and evaluation pro- 
visions of the Chairman's October 2 draft. 

On the other hand, it eliminated the specification of the 
DSARC Chairman, Dr. Bennett, from the review process for both 
the DCP and the ILSP; it permitted pre-production activity 
that would maintain the progress of the Navy's program; it 
made certification of test accomplishments the responsibility 
of a subordinate element of DDR§E; and, despite a disclaimer 
in the first paragraph, it provided an automatic production 
authorization after successful completion of tests, studies, 
and administrative actions. A trade-off is apparent. In 
return for Dr. Bennett's agreement to take the CONDOR program 
out of advanced engineering development and move it closer to 
a final production decision, the DDR§E seems to have had to 
accept certain of the test and evaluation requirements insisted 
on by the DSARC Chairman. However, DDR§E had kept the program 
from being indefinitely delayed. The necessity for the additional 
tests and certifications insisted on by Dr. Bennett would delay 
the implementation of the automatic production authorization 
only by a matter of months, depending on how these added con- 
ditions were met. 

Just prior to or following this mid-October executive 
session, Dr. Currie himself, according to testimony received 
by the subcommittee, assumed control of the process of coordi- 
nating a draft action memorandum for a matter of days. During 
this period, therefore, comments or concurrences on drafts 
were provided to him, rather than to the DSARC Chairman or 
Executive Secretary, as would normally be the case. Some of 
the witnesses before the Subcommittee on Investigations be- 
lieved that this was an irregular procedure. 

The subcommittee could obtain no written record or testi- 
mony concerning Assistant Secretary McClary's review of any 



73 



drafts in this period. But on October 16, Assistant Secre- 
tary Sullivan provided to Dr. Currie his opinion of a re- 
typed and altered version (#5) of Dr. Currie's memo, to 
which the subcommittee was also provided access. 

This draft circulated by Dr. Currie differed from the 
one he had edited in his own hand in only three significant 
ways : 

1. it stated that production was not authorized 
"at this time." 

2. it contained a reference to DSARC concern about 
the "overall quality of the management of the program by 
the Navy... as evidenced by decisions on reliability 
testing and quality control during the pre-production 
phase and by lack of adequate logistics support and 
production planning." (This was the first explicit 
criticism of the Navy's program management in any of 
the drafts.) 

3. it added a new statement to the effect that 
"...the requirement of the Navy for capability of the kind 
provided by CONDOR and the success of the program in meeting 
its difficult technical performance goals..." was acknowledged 
(This is the first time that the Navy's requirement and the 
CONDOR'S technical performance were recognized in any of the 
drafts.) 

Mr. Sullivan made no suggestions for changes but, in- 
stead, responded to Dr. Currie's altered draft with a writ- 
ten note as follows: 

Please add the following to your 
covering brief: "ASD (PA§E) strongly feels 
that CONDOR represents a "nice to have" weapon 
at best, and only if its cost is low, and its 
reliability high. Since the current CONDOR 
does not meet these criteria, he believes that 
the program should not continue towards pro- 
duction release at this time. It has been a 
poorly managed program with very limited pro- 
duction buys planned. It is a prime candidate 
for total cancellation if budget restrictions 
persist. He believes at best, OSD should 
investigate "salvaging" parts of the CONDOR 
seeker as an alternative guidance mode for 
HARPOON." 

On the following day, October 17, the DSARC Chairman 
returned to Dr. Currie a version (#6) identical to that on 
which Mr. Sullivan had commented and indicated by changes 



74 



entered on the copy itself the modifications desired. The 
changes were: 

1. deletion of a reference to the CONDOR Program 
Manager . 

2. addition of a requirement for "an appropriate 
number of free flight demonstrations" in the CONDOR 
reliability tests. 

3. substitution of a new final papagraph, which read 
as follows : 

Evidence of successful completion of 
the above actions, including the additional 
reliability demonstration program, will be 
presented at a Program Review, after which 
the Navy will be authorized to proceed into 
limited production in accordance with the 
plans set forth at the DSARC Review. 

The DSARC Chairman was apparently still trying to pre- 
vent, insofar as possible, an automatic production authori- 
zation by adding to Dr. Currie's final paragraph a require- 
ment for a review at the OSD level of the Navy's test and 
study results. This requirement did not appear in Dr. 
Currie's draft. 

At about this time, according to the sworn testimony 
of the DSARC Executive Secretary, control over coordination 
of the draft action memos was returned to him by Dr. Currie. 
In a subsequent draft (#7) , apparently prepared in the of- 
fice of the DSARC Chairman, two of the requirements relating 
to testing were tightened slightly but this draft removed the 
earlier requirement for free flight tests and the final para- 
graph was altered once again: 

Following successful completion of the 
above actions, including the additional testing 
on existing pilot production missiles, the Navy 
will seek DSARC approval to enter into limited 
rate production. 



Final Action Memo 

These last minute changes seem to represent the final 
modifications made by DDR§E and Dr. Bennett's office, for 
on Friday, October 17, the very date Dr. Bennett had sent 
back Dr. Currie's draft with suggested changes, the DSARC 
Executive Secretary prepared a clean version of the pro- 



75 



posed action memo and a covering memorandum for Dr. Bennett's 
signature as DSARC Chairman. These two items were forwarded 
for the Deputy Director for Test and Evaluation. (See Ex- 
hibits C and D ) 

The forwarding or covering memo prepared for Dr. Bennett's 
eventual signature, after concurrence by the rest of the DSARC 
principals, contained a brief resume of the CONDOR DSARC, Mr. 
Sullivan's disclaimer about the program, and on the second page 
a very brief summary of the points in the action memorandum it- 
self. 

According to copies provided to the subcommittee, the 
Deputy Director for Test and Evaluation concurred on the fol- 
lowing Tuesday, Mr. Sullivan on Wednesday, Mr. McClary on 
Thursday (concurring only in the second page and not with 
Mr. Sullivan's disclaimer), and Dr. Currie on an unspecified 
date. A week later (after a delay that is hard to explain in 
terms of the earlier rush to forward an action memo) , on 
October 31, Dr. Bennett signed the covering memorandum to 
Deputy Secretary Clements, who, on November 4, signed the 
controversial action memorandum directing the Secretary of 
the Navy to fulfill its requirements. 

As the final memorandum advanced toward adoption, 
Rockwell expressed satisfaction with the results. On October 
27, P.G. Paraskos wrote to J.F. Reagan: 

OSD is staffing the final directive 
for the Secretary of Defense signature. The 
program will be the refurbishing phase (vali- 
dation phase) and long lead production with 
the low rate initial effort with follow-on 
test and evaluation prior to full rate pro- 
duction. It is also significant to note 
that this was the original kind of program 
that was discussed last June and July in 
properly estimating the award, sales, and 
profits for Condor. [emphasis added] 

SUMMARY 

Analysis of the action memoranda proposed or endorsed 
by different principals thus discloses that: 

(1) Mr. Sullivan consistently favored termination of 
the program, since the Navy did not plan to deploy it in 
limited quantities for special missions only and since it 
did not meet reliability and cost-effectiveness criteria in 




76 



• /OR OFFICIAL USE Of/LV nc °° r . ? * 

ASSISTANT SECRETARY OF DEFENSE ^ U -L ^. ™» SEEi'j 

WASHINGTON, O.C. 20301 



EXHIBIT C 



INSTALLATIONS AND IO0ISTICS 




31 OCT r375 

MEMORANDUM FOR The Deputy Secretary of Defense 

SUBJECT: AGM-53-B - CONDOR Missile Program - ACTION 
MEMORANDUM 



On 30 September 1975 a DSARC III review of the CONDOR program 
was accomplished to determine the readiness of the missile system 
to proceed into the production phase. 

The Navy's recommended program was to proceed into low rat*:e 
(approximately five missiles per month) production and, in parallel, 
to complete pre-production qualification and reliability demonstrations 
deferred from the previous pilot production program. After successful 
completion of at least a portion of the deferred activities, the CONDOR 
program would commence full rate production. The Chief of Naval , 
Operations on 12 August 1975 issued a provisional release of the 
CONDOR missile system for Service use, with a full release to be 
provided after successful completion of the follow-on testing. 

Afte r much deli beration, with regard to the Operational Evaluation 
reliability test results and the scatus of overall CONDOR production 
readiness , the_p_S ARC recom miends_thaj_a_pr-Oduction^p_z.aheadjap_t_be 
3Hthorji- z c.d_until deficiencies have been corrected. The ASD(PAkE ) 
has taken a strong position mat CONDOR represents a "nice to have" 
weapon at best, and only if its cost is low, and its reliability high. 
Since the current CONDOR does not meet these criteria, he believe s. 
that the program sho u ld not c qntin u_c_jLav-'^ r d 5 prgrUictAgn. T^r-P^s_t_9i 
this tim e. It has been a poorly managed progra m with very limited 
production buys planned. I t is a prime cand id ate for t otal ca ncellation 
iirbudgct restriction s persist. He believes at best, OSD should investi- 
gate "salvaging" parts of the CONDOR seeker as an alternate guidance 
mode for HARPOON. . 



\ J* 

FOR OFFICIAL USE ONLY ifl^J^ 



77 



FOR OFFICIAL USE ONLY! 



The attached memorandum, for your signature, directs the Navy to: 

o Perform additional appropriate reliability testing. 

o Propose pre-production activity which can support an initial 
limited production rate. 

The attached memorandum has been discussed with the Under Secretary 
of Navy. 




v?u#y 



30HM J. EENNETT ^> 
Acting Asc:;t-r.t Secretary of Dafense 
v (Installations and Logistics) 



Attachment 

Concur ; 

DDRk E Pr » Currie (Tab A) 
ASD (C ) Mr. McClary (Tab B) 
ASD (PA U E ) Mr. Sullivan (Tab C) 
DD(T&E) General Lotz (Tab D) 

Prep: R. D.Thomas, X-57072 



EXHIBIT C (cont.) 



78 




THE DEPUTY SECRETARY OF DEFENSE 

WASHINGTON. D C. 2O301 EXHIBIT D 



NOV 4 1975 



MEMORANDUM FOR The Secretary of The Navy 
SUBJECT: AGM-53-B - CONDOR Missile Program 



The CONDOR DSARC UJ review was conducted on 30 September 1975. 
The review surfaced concerns relating to: 

(1) Demonstrated level of missile reliability. 

(2) Overall quality of management of the program by the Navy as 
evidenced by decisions on reliability testing and quality control during 
the pre-production phase and by lack of adequate logistic support and 
production planning. 

(3) Weapons system vulnerability and operational use. 

I recognize both the requirement of the Navy for capability of the kind 
provided by CONDOR and the success of the program in meeting its 
difficult technical performance goals. However, I do not authorize 
production go-ahead at this time. Expenditures and liability to the 
Government will be limited until deficiencies have been corrected. 

The Navy will provide by 1 December 1975, a plan for correcting the 
primary program and system deficiencies illuminated by the DSARC. 
The plan will assure that necessary changes have been defined to im- 
prove overall system reliability and to demonstrate by laboratory and 
flight tests that reliability requirements have been satisfied. The 
activity in this regard will include the following: 

o Incorporate improvements and perform appropriate reliability 
testing of approximately 10 of the existing missiles in accordance with a 
plan set forth by DD(T&E). 

o Propose pre-production activity which can provide necessary 
material support for an initial production rate of five missiles per 
month. C">vernment exposure relative to commitments for long lead 

Encl (1) to Ser 987R/184822 
to \i .::•- • • 



FOR OFFICIAL USE 6NIY * ' U T""' 

0j '^ ifiQCLASSIFIED 



79 



time materials and facilities will be limited to $10 million until certification 
of accomplishment (i. e. , satisfactory results of testing of existing missiles) 
has been provided by the DD(T&E). 

o Develop a production plan wherein contractual provisions and 
commitments are oriented to the accomplishment of goals rather than 
calendar milestones, including testing to be completed in each phase of 
the plan. 

o Submit by 1 December 1975 a detailed test and evaluation plan to 
the DD(T&E) for review and coordination. The plan should clearly identify 
test objectives and evaluation criteria for testing of the 'existing 10 pilot 
production missiles. 

With regard to the issue of weapon system missile effectiveness, the Navy 
will undertake a study to evaluate CONDOR system vulnerability to counter- 
measures and air defenses including interceptor /fighter forces. This study 
activity should be supplemented by considering other aspects such as the 
feasibility of additional testing utilizing penetration aids, tactics and 
terminal defensive countermeasures, e.g., smoke. 

I recognize that due to funding constraints, the Integrated Logistics Support 
Plan (ILSP) has not been updated to reflect recent program definition in the 
areas of reliability, spares support, maintenance, and revised ILSP for 
review and approval. Therefore, the Navy will submit a revised ILSP for 
review and approval. The ILSP will address reliability demonstration 
plans and the reflection of those plans on support costs. The ILSP will 
also address current operational training concepts and provide a descrip- 
tion of and an associated development schedule for required trainer equip- 
ments. A production readiness review will be accomplished prior to a 
full production decision. This review will include the general area of 
support planning. 

The draft DCP No. 14, Revision B, will be revised by the Navy to reflect 
this decision and submitted by 1 December 1975. 

Following successful completion of the above actions, including the 
additional testing on existing pilot production missiles, the Navy will 
seek DSARC approval to enter into limited production of the missile. 



h- 



EXHIBIT D (cont.) 
FOR OFFICIAL USE ONLY 




UNCLASSIFIED 



80 



a period of restricted budget resources. He was willing, 
however, to see it retained in advanced engineering develop- 
ment to determine whether its defects could be remedied, as 
originally recommended by Dr. Bennett. 

(2) Dr. Bennett was disposed to terminate the CONDOR 
program but would accept its retention in advanced engineering 
development status while additional and strict tests and 
studies were conducted to assure that it could meet not only 
production reliability requirements but also penetration 
requirements, logistics support criteria, and cost reduction/ 
cost avoidance standards. He was willing to offer CONDOR 

an opportunity but only with stringent performance safeguards 
relating to demonstrations of reliability, penetrability, and 
overall cost-effectiveness. 

(3) Mr. McClary overcame earlier concerns about the pro- 
gram, endorsed the approach taken by DDR§E, and played only a 
passive role in the post-DSARC deliberations. 

(4) Dr. Currie was the persistent advocate of an action 
memorandum that would not unduly delay a production decision, 
that would ensure the ultimate production decision was favor- 
able by softening the testing and administrative requirements 
for CONDOR, and that would direct pre-production testing, 
planning, and contractual activity to permit a production not 
substantially different from that first proposed by the Navy 
on September 30 (i.e. initial low-rate production of five 
missiles per month while customary production tests were con- 
ducted and sustained rate production after completion of these 
tests). His position at nearly every stage, was not significantly 
different from that advocated by the contractor. 

If there were any architects of a slow-down in the 
CONDOR program following the September DSARC , they were Dr. 
Bennett and Assistant Secretary Sullivan. The role of Dr. 
Currie, by contrast, was to take the contractor's and the 
Navy's preferred option, which had not had a favorable recep- 
tion at the DSARC meeting, and, with some relatively minor 
changes, fashion it into a more marketable program. 

Dr. Currie's actions in this regard are significant in 
the personal attention he gave to the fate of the CONDOR pro- 
gram -- intervening in the drafting of the action memorandum 
and assuming responsibility for coordination of these memos. 
This was, moreover, -a program which two other DSARC principals 
testified was not of a large enough dollar value to engage 
their particular interest during the budget cycle of October 
1975. 

While the action memorandum eventually signed by Deputy 



81 



Secretary Clements contained several hurdles which the CONDOR 
program had to pass, its greatest significance lay in the fact 
that it preserved for the CONDOR a production decision at an 
early date and one that was so structured as to make an un- 
favorable decision very unlikely. 



82 



1975 EFFORTS TO APPEAL O.M.B. CANCELLATION OF CONDOR 

No sooner had CONDOR evaded retention in advanced engi- 
neering development that Director James T. Lynn of the Office 
of Management and Budget (OMB) , in his review of the Department 
of Defense budget submission with the President on November 21 
and 22, recommended that the CONDOR program be cancelled. 

Apparently the recommendation was accepted, for on 
November 26, Deputy Secretary of Defense Clements wrote to 
the President on behalf of the CONDOR program, seeking its 
reinstatement in the President's budget request then being 
completed for fiscal year 1977. 

The subcommittee's requests to review or obtain a 
copy of this letter were, after considerable delay, refused 
by the Department of Defense, which maintained that the letter " 
an Executive Office of the President paper which we believe 
should be requested from the White House Staff." 

Two weeks after the committee requested the letter from 
the National Security Council on September 14, 1976, neither 
the letter nor any official reply had been received from the 
White House staff in response to the committee's request. 

No such barriers appear to have existed at the time the 
letter to the President was prepared, since officials of Rock- 
well International had knowledge of the letter and events 
surrounding it almost at the time they were taking place. 

On December 1, 1975, Peter Paraskos, the Marketing Vice 
President of Rockwell's Missile Systems Division, reported to 
MSD President J.F. Reagan that a threat had materialized: 

In the Office of Management and Budget (OMB) 
review with the President, with no OSD partici- 
pation, OMB recommended drastic action of the 
GFY [Government Fiscal Year] '77 budget with im- 
pact on '76. One of the programs recommended 
for cancellation was CONDOR. 

The Paraskos memo goes on to indicate that MSD was able 
to obtain the previously lacking OSD participation: 

MSD, working with [Rockwell] Washington Office per- 
sonnel and particularly J.H. Garrett, was success- 
ful in having top level Navy and OSD support in 
the reclama to the OMB action. Specifically, two 



. . is 



83 



letters were sent to Secretary of Defense 
Donald Rumsfeld from the Secretary of the 
Navy and Dr. Currie of DDR$E completely sup- 
porting and protecting the CONDOR program. 
In addition, Dr. Currie took on the uni- 
lateral action by OMB as completely un- 
called for. CONDOR is the only system to 
date to have the personally documented 
support from SecNav and OSD. These letters 
will be an asset to further offset other 
anti-CONDOR thrusts such as Senator Eagle- 
ton, GAO , etc. [emphasis in original ] 



Dr. Currie acknowledged that he had pointed out the OMB 
action to Deputy Secretary Clements and stated that "I recom- 
mended that he reclama that action inasmuch as the DSARC , and 
the Secretary himself, had decided to go ahead with this reli- 
ability testing." 

Although testifying that his office may very well have 
been involved in the appeal to the President, Dr. Currie 
stated that he had "no specific recollection" that he or any 
DDR^E subordinate had assisted in drafting letters to counter 
the OMB action. 

To date, the Defense Department has also been unable to 
respond to the subcommittee's request to obtain or review a 
copy of the letter which the Paraskos memo reports Dr, Currie 
wrote to the Secretary of Defense requesting reinstatement of 
the CONDOR program in the President's budget request. 

These letters are notable in two respects. First, they 
appear to represent a special effort on behalf of the CONDOR 
program. This is reflected in the Paraskos memo's notation 
that "CONDOR is the only system to date to have the personally 
documented support from SecNav and OSD." Moreover, the nor- 
mal procedure for appeals of OMB reductions or cancellations 
is for the Assistant Secretary (Comptroller) to prepare a sin- 
gle, consolidated list of reclama actions for the Secretary of 
Defense to forward to the President. The letter or letters 
attributed to Dr. Currie or DDR§E, if authentic, would be 
unusual in their exclusive appeal for CONDOR in the face of 
cuts totalling over S6 billion and in their not being pre- 
pared in the Comptroller's office.* 



*The Staff Secretary of National Security Council has 
confirmed to the committee counsel the existence of the No- 
vember 26 letter from Deputy Secretary Clements. 



84 



Comptroller McClary testified before the subcommittee that 
he had no knowledge of the correspondence from Dr. Currie, nor 
did he recollect Dr. Currie communicating to him a suggestion 
to attempt to restore CONDOR funding. 

The second apparent irregularity is the fact that com- 
munications which are regarded as privileged when requested 
by the Congress were apparently known to the CONDOR con- 
tractor during the period when they were written. 

In any case, later in December, the White House announced 
various cuts in the Department of Defense budget. Among them 
was the CONDOR, for which projected savings were claimed of 
$49 million in fiscal year 1977 and $65 million in fiscal 
year 1978. These were part of a group of reductions and 
cancellations aimed at reducing the overall defense budget 
request for fiscal year 1977 from a planned $116.5 billion 
to $110 billion. 

During this period, the usual consolidated list of 
Defense Department reclama items was prepared in the Comptroller's 
office. It, too, reflected the OMB proposal to delete the 
CONDOR. Subsequently, on Saturday, December 13, Defense Secre- 
tary Rumsfeld, newly sworn in on November 20, discussed the 
cuts with the President. In the end, the CONDOR program was 
retained in the budget. 

(A report in a trade publication for the aviation industry 
following announcement of CONDOR'S retention indicated that its 
survival was attributable to "strong support by top Pentagon 
and Navy officials." It described the support in these terms: 

Deputy Defense Secretary William P. Clements, 
in a letter to President Ford dated Nov. 26, said 
the missile will add a "new dimension" to the Navy's 
tactical air capability. Clements was backed by 
the Secretary of the Navy and the Directorate of 
Defense Research and Engineering. 

Clements' letter was prompted by a White House 
cut of some $6.6 billion from the projected FY' 77 
Pentagon budget. Programs affected by the cut, in 
addition to Condor, included Grumman's A-6E and E-2C, 
McDonnell Douglas' A-4M, the Navy's medium sized 
carrier and the Air Force's A-10 close support plane... 

The White House, in meetings over the weekend and 
on Monday, restored about $2.6 billion of the planned 
cut, giving Condor and other weapons a clean bill of 
health in the FY '77 budget, which will be presented 
to Capitol Hill in January. 



85 



Clements' letter on Condor said it has 
"reached the final stage" in its development, 
that it will allow a "very precise application 
of force from long standoff ranges," that it is 
a "viable and most necessary addition to the 
Navy's carrier forces," that it enhances "aircraft 
survivability" and allows "a high degree of tac- 
tical flexibility," and that it will be a significant 
weapon for the Navy "in the next decade." 

Top Navy officers, including the Chief of 
Naval Operations, pressed the White House and 
the Office of Management and Budget on Condor 
with even stronger language, but it is classified, 
sources said. 

The trade journal report is significant in the degree to which 
it parallels the information contained in Mr. Paraskos ' memoran- 
dum to Dr. Reagan of December 1. As with the Paraskos memoran- 
dum, this article alludes to correspondence which uniquely 
supports CONDOR among all systems cut by OMB.) 



86 



THE PRINCIPIA STUDY 

One of the additional steps required by the Deputy 
Secretary of Defense action memorandum of November 4, 1975, 
was that the Navy: 

undertake a study to evaluate CONDOR system vulnera- 
bility to countermeasures and air defenses including 
interceptor fighter forces. This study activity should 
be supplemented by considering other aspects such as 
the feasibility of additional testing using penetra- 
tion aids, tactics and terminal defense countermea- 
sures , e.g., smoke . 

The memorandum did not stiputlate whether this study 
should be performed by NAVAIRSYSCOM; by an in-house Navy re- 
search arm such as the Center for Naval Analyses; by the Of- 
fice of Program Analysis and Evaluation (PA$E) ; by an OSD 
research arm such as the Institute for Defense Analyses; 
or by an outside consulting firm. 

This requirement first appeared in the original I$L 
draft decision memorandum of October 2, 1975, prepared by 
DSARC Executive Secretary Ronald Thomas. The requirement 
survived other drafts and was ultimately issued by DEPSEC- 
DEF Clements. It appears to have been an attempt to draw 
attention to the earlier COMOPTEVFOR findings on vulnera- 
bility and to assure the CONDOR could perform its mission of 
taking out heavily defended targets. 

The Program Manager, Captain Z.J. Kowalskey, USN, stated 
in his testimony that he had sought a waiver of this 
requirement. As a fallback position, he sought authority 
to have ths study conducted by the Institute for Defense 
Analyses or the Weapons Systems Evaluation Group, two OSD- 
level analysis groups. He testified as to his reluctance 
to have the study done by an organization affiliated with 
the Navy: 

I was looking for independence ... I could have the 
Naval Weapons Center at China Lake do it. I could 
ask the prime contractor to do it because there is 
some expertise within the Rockwell organization to 
conduct this study. I could ask our own people at 
Air 503 [NAVAIRSYSCOM Systems Analysis Division] to 
do it. [But] anything with a Navy label, in my view, 
would be slanted, and therefore I was looking for 
independence. 



87 



In his efforts to achieve independence, Captain Kowalskey 
apparently unwittingly compounded the problem by executing 
a contract with a firm with a serious institutional conflict 
of interest relating to the CONDOR program. He testified 
that his requests to waive the requirement or have OSD perform 
it were turned down and, operating within his self-imposed 
limitations, he had no choice but to execute a contract with 
an outside firm to fulfill this requirement. He further 
testified that he had received telephone inquiries from three 
corporations relating to the requirement for a vulnerability 
study: Principia Incorporated of Arlington, Va . ; Farnswonh 
Cannon of McLean, Va.; and Delex Systems of Springfield, Va. 
According to his testimony, Captain Kowalskey answered all 
three queries identically: 

I got an inquiry on the telephone, and they 
said, 'I understand you have to have a vul- 
nerability study done.' 'The answer is yes.' 
•What do you need?' and I said, "Well, this 
is a vulnerability study. It is going to be 
comparative, and if you are interested, send 
in a proposal . ■ 

He stated, however, that Principia was the only one of 
the three which submitted a proposal. Principia is a small 
consulting firm which, according to its founder, was begun 
in 1973 or 1974. According to DoD records, the company re- 
ceived no contracts from the Department of Defense during 
FY 1974, and received $ 105,000 for two studies ordered 
from the Naval Research Lab in FY 1975. Among the founders 
of Principia was Allan Simon, who is currently board chair- 
man. 

Mr. Simon is also a principal in the consulting firm of 
Davis, Simon, Fubini, and Kent, also of Arlington, Va. All 
four members of the firm are either recently retired high- 
ranking military officers or former Department of Defense 
officials who recently left the employment of DoD. In his 
capacity with the latter firm, Mr. Simon has been employed 
since 1973 to consult for the Rockwell International Missile 
Systems Division (MSD) . Dr. J.F. Reagan, MSD President, ac- 
knowledged in his testimony before the Subcommittee on In- 
vestigations that Mr. Simon had consulted for the company on 
the CONDOR program. Documents provided bv the company to this 
subcommittee indicate the Mr. Simon was paid $12,949 by the 
company in fiscal year 1973, $24,598 in FY 1974, and $23,407 
in FY 1975. In his sworn testimony, Dr. Reagan described Mr. 
Simon as a technical consultant on technical matters relating 
to the CONDOR and a number of other programs, but the company 
documents list Mr. Simon as a non- technical consultant. Dr. 
Reagan acknowledged that Mr. Simon was still employed. by the 
company as a consultant at the time the vulnerability study 
contract was awarded. 



88 



In the November 11, 1974 strategy manual prepared by Dr. 
Reagan, Mr. Simon was listed among seven Rockwell employees and 
three consultants who had contacted or briefed members of Con- 
gress, Congressional staff members, and OSD and Navy offi- 
cials during the 1974 actions. The manual did not reflect 
which individuals were contacted by Mr. Simon, or what these 
contacts entailed. Dr. Reagan acknowledged that the manual 
did indicate contacts by Mr. Simon, but could not remember 
the persons contacted or subjects of the visits. Mr. Simon 
denied that he had ever made any such contacts. 

However, it is apparent that Mr. Simon provided a sig- 
nificant amount of effort to the CONDOR program by virtue 
of his employment as a consultant. 

The witnesses disagreed about the circumstances sur- 
rounding the award of the contract. Captain Kowalskey, as 
noted previously, stated that he received telephone calls 
from three firms, including Principia inquiring a face-to-face 
meeting among Captain Kowalskey, Principia President Clayton 
F. Black, and himself. Mr. Simon stated that he had informed 
Dr. Black of the Navy's need for a vulnerability study, and 
had suggested that Dr. Black apply for the contract. Mr. 
Simon further stated that he had offered to introduce Dr. 
Black to the Navy Program Manager. 

Another area of disagreement among witnesses concerned 
the method by which Mr. Simon was informed of the require- 
ment. When asked whether he had any ideas how this could have 
happened, Captain Kowalskey testified that he believed the 
company could have learned through a short article in a No- 
vember 1975 issue of Aviation Week and Space Technology which 
mentioned this requirement. He testified that "I should 
point out that that notice in Aviation Week preceded the 
first proposal from Principia."* Initially Mr. Simon also 
stated emphatically that his first notice of this require- 
ment came through the Aviation Week article. When he was 

*In a letter to the committee, following his review of 
the hearing transcripts, Captain Kowalskey wrote: 

If I, in fact, did testify that receipt of the 
first Principia proposal occurred after the Aviation 
Week article, that was an error. The data I have pro- 
vided to you clearly shows that the first Principia pro- 
posal was dated 10 November, while the Aviation Week 
article was published 17 November. 

A review by the reporter of his own tape and one made by a 
back-up recording device indicates Capt. Kowalskey' s testi- 
mony was as quoted above. 



89 



informed that the first Principia proposal had been re- 
ceived by Captain Kowalskey on November 10, 1975, one week 
before the appearance of the Aviation Week story, Mr. Si- 
mon acknowledged that he probably heard of the requirement 
"when wandering around the halls of the Pentagon." 

Mr. Simon could not remember who had told him, al- 
though he pointed out that it had been no special secret. 
He did not think it unusual that a potential contractor 
could prepare and submit a proposal less than a week af- 
ter the requirement for that proposal was officially gen- 
erated and before that same requirement was announced. 

In January 1976, when it became apparent that the 
Navy intended to contract for a simulation study (which 
would in all probability not either emphasize the OPEVAL 
findings or materially add to the knowledge contained in 
those reports) some OSD staff members from PA§E and the 
Office of Installations and Logistics attempted to with- 
draw the requirement for a vulnerability study. This 
attempt was unsuccessful, however. A contract was exe- 
cuted in January with Principia to conduct this study. 
Thus, a company whose chairman had provided technical and 
possibly marketing assistance to the contractor of a 
weapons system was placed in the position of exercising a 
supposedly independent judgement for DoD on that weapon 
system's performance. 

The Department of Defense has recognized the dangers 
inherent in such organizational conflicts of interest, and 
has adopted rules within the Armed Services Procurement 
Regulation (ASPR) to inhibit such conflicts. Although 
the rules in ASPR Appendix G ("Avoidance of Organization- 
al Conflicts of Interest") do not appear specifically to 
address the situation brought about by the award of this 
contract, the preamble states clearly that: 

"Where the Department of Defense does con- 
tract for research and development work, as it 
must do for the bulk of that work, its choice of 
a contractor should be based primarily upon two 
considerations: ...(2) Avoiding assignments of 
work which would create inherent conflicts of in- 
terest... The ultimate test should always be: Is 
the contractor placed in a position where his 
judgment may be biased, or where he had an unfair 
competitive advantage? If so, corrective action 
should be taken." 



90 



The CONDOR Program Manager, Captain Kowalskey, tes- 
tified that Principia submitted three separate proposals 
for the vulnerability study. The first two were submitted 
during November 1975 (both before the appearance of the 
article in Aviation Week) , and the third was submitted in 
January 1976, shortly before the contract was awarded. 
Mr. Simon's name was not listed in the first two docu- 
ments, but was listed on the third. 

Captain Kowalskey testified that he did check out the 
technical expertise of the Principia principals, and admit- 
ted that his knowledge of Mr. Simon's background played 
some role in the decision to award the contract to„ that 
company : 

On the issue of expertise, yes, sir, I did [review 
the names of the Principia proposals], where do these 
people come from; for example, Dr. Black, who is the 
President of the company, came from the Center for 
Naval Analysis. Mr. Simon I had known by reputation 
but not personally, on the basis of [his] having been 
in TWP [Tactical Warfare Programs Division of DDR§E] 
over at the Office of the Secretary of Defense. 

Captain Kowalskey went on to say, however, that " It 
did not occur to me nor apparently to anybody in my system, 
to check for potential conflict of interest." 

Dr. Reagan testified that he heard of the requirement 
for a CONDOR vulnerability study "sometime in October" of 
1975. He stated that he never communicated with Mr. Simon 
or with any other official of Principia regarding this mat- 
ter, and that he had no knowledge of any such communications 
from any of his employees. 

Dr. Currie and Mr. Parker of DDR$E testified similar- 
ly that they knew Mr. Simon and knew that he consulted to 
industry. However, both of these individuals stated that 
they had not known that Mr. Simon had consulted for Rock- 
well, and had not known that Mr. Simon was affiliated with 
Principia Incorporated. 

The Principia study was criticized by a number of 
sources, most notably the General Accounting Office. In 
testimony before the Senate Appropriations Committee, GAO 
Procurement and Systems Acquisition Director R.W. Gutmann 
stated that, although the study had concluded that the 
missile and launching aircraft, in general, would be less 
vulnerable than other systems, "We noted several serious 
shortcomings in the vulnerability study which raises ques- 
tions as to its usefulness." These he summarized: 



91 



The study used a single attack situation 
of scenario [deleted] assuming characteristics 
of surface-to-air missiles, antiaircraft artil- 
lery, and attacking missiles or glide bombs that 
were favorable to the Condor. 

For instance, the target postulated [deleted] 
hostile territory minimizing the exposure of the 
Condor aircraft as compared to aircraft carrying 
the glide bombs. [Deleted.] 

The study does not use some of the factors 
critical to predicting aircraft and missile sur- 
vival rates, such as evasive maneuvers, clutter, 
radar errors, dynamic homing errors, jammer loca- 
tion, and important gun defenses. 

As a result, the model and the study predict 
aircraft attrition rates that are higher than the 
worst attrition experienced in the Vietnam and 
Arab-Israeli wars [deleted.] 

The study further considers almost all losses 
to be due to surface-to-air missiles, when it is 
known that a significant number of the losses in 
recent wars were due to antiaircraft guns and enemy 
fighters . 

The inclusion of those terminal defenses that 
would be much more effective against Condor than 
against other weapons --guns and infrared missiles-- 
is necessary in considering Condor survivability. 

Further, a radar cross-section was assumed for 
Condor that was [deleted] of the radar cross-section 
of Walleye or the electrooptical glide bomb, al- 
though the difference in diameter of Condor and 
Walleye or glide bombs is very small. 

We believe that the following matters must be 
taken into account when assessing the desirability 
of acquiring the Condor. 

First, if the [deleted] attrition rates of Condor 
launching aircraft, for Condor launch ranges [deleted] 
predicted by the model for the [deleted] situation are 
credible, the justification for buying the Condor sys- 
tem is weakened because with attrition rates of that 
size, the total force could be lost quickly. 

[Deleted. ] 

Third, all three weapons systems - Condor, Walleye 
and electrooptical glide bomb -- are special purpose, 
limited use weapons. They can only home on visible, 
high contrast targets of known, fixed location. Smoke, 
weather, and camouflage may well defeat them. 

Fourth, on impact, the Condor only delivers the 
equivalent of one 500-pound bomb while the Walleye 
and electrooptical glide bomb deliver the equivalent of 
a single 2,000-pound bomb. Therefore, more Condor 
missiles would be required for equal target kills and 
vulnerability should be assessed in terms of missile 
and aircraft losses per target killed. 



92 



Fifth, since target characteristics are not in- 
cluded in the study, vulnerability comparisons with 
the Walleye II and the glide bomb are not valid in view 
of the significant difference in warhead size. 

Sixth, all three weapons could be shot down with 
antiaircraft guns, because of their straight, non- 
maneuvering terminal flight path. Condor is more 
vulnerable because it is much more easily detected due 
to its white smoke trail. 

Seventh, Condor's hot rocket motor makes it 
highly vulnerable to infrared missiles of the Side- 
winder and Redeye type [deleted] . 

These infrared missiles were not considered in 
the vulnerability study. However, the operational 
test and evaluation force reported Condor was 
acquired [deleted]. 

In evaluating the work performed by Principia, it is 
important to note that the requirement for a vulnerability 
study was contained in the 4 November 1975 action memoran- 
dum from DEPSECDEF Clements. According to the terms of 
that memorandum, all assignments were to be accomplished 
before a final decision would be reached. The memorandum 
did not specify that the study had to be a computer-simu- 
lation; it merely said that vulnerability to countermea- 
sures and air defenses should be evaluated. 

Moreover, the action memorandum appears to require a 
study of CONDOR'S absolute vulnerability, not its vulner- 
ability in comparison with other available weapon systems, 
which was the approach adopted in the Principia study. 

The Principia report was completed in May 1976, to 
fulfill the requirement for a vulnerability study. Para- 
doxically, CONDOR DSARC II IB, which met to certify that 
the requirements of the 4 November action memorandum had 
been met and that the system was ready for production, 
found that further vulnerability testing was necessary. 
DSARC Chairman Bennett stated that the Navy testing had 
"...still left the question of penetration. Now we knew 
that the only way you could answer this question was 
through live tests." But this was not the way the Navy 
chose to answer this question, which seems to have remained 
unanswered when the DSARC IIIB approved production for CON- 
DOR in June 1976. 



93 



DSARC IIIb milestone: JUNE 1976 



Once the requirement to keep the CONDOR program in 
advanced engineering development was overcome, the mis- 
sile's future was virtually assured, since it appeared 
to have passed the DSARC III milestone and since the 
obstacles interposed to its eventual production had been 
systematically eroded. Although Deputy Secretary Clements 
had signed the November memo saying that production was 
not authorized, the issue was sufficiently confused and 
ambiguous that by early 1976 he could issue a memo di- 
recting that certain systems which had passed their 
DSARC III milestone, including CONDOR, be turned over 
to their service sponsors for future review and monitor- 
ing. Mr. Robert Parker, Principal Deputy Director of 
DDR§E, testified as to his understanding that the Deputy 
Secretary's staff had simply reviewed which programs had 
proceeded through a DSARC III without determining whether 
further OSD-level review was needed. Mr. Parker testified 
that he informed the Deputy Secretary of the need for 
additional DSARC review. Ambiguity of status was and 
continued to be an asset for CONDOR. 

Moreover, the requirements made of the CONDOR pro- 
gram were confined primarily to the reliability problems 
(which all considered capable of ready solution) to 
administrative matters (updating, revising, and submit- 
ting or resubmitting a variety of plans) and, significantly, 
to carrying out pre-production activity. 

As noted in the prior section, the Navy was to satis- 
fy the requirement for an evaluation of the CONDOR'S vul- 
nerability to air defenses, not by testing of the missile's 
absolute characteristics, but rather by a computer simu- 
lation that compared the CONDOR to other weapons already 
in the inventory. It concluded that the CONDOR was pref- 
erable to the others. The other option stated in the No- 
vember action memo, to consider testing CONDOR with pene- 
tration aids and terminal defensive countermeasures , such 
as smoke, was not explored by the Navy. In subsequent 
testimony before the Senate Appropriations Committee, a 
representative from the General Accounting Office was to 
comment: "We noted several serious shortcomings in the 
vulnerability study which raise questions as to its use- 
fulness." The GAO witness then went on to detail a 
series of deficiencies in the study, most of which gave 
an advantage to CONDOR over the other systems with which 
it was compared. 

At the insistence of the DSARC Chairman, the November 
action memo had contained a requirement that a detailed 
test and evaluation plan for further CONDOR assessment be 
submitted to DD(T§E) and that this test plan specify test 



94 



objectives and evaluation criteria. Such a plan was 
submitted on December 5 and an addendum was submitted 
in early February, the same week that the CONDOR was to 
commence its second operational evaluation, now known as 
Phase II. 

The performance thresholds specified in the Phase 
II test plan were, in several instances, the same as 
those used during the Phase I evaluation or were based 
on whatever performance level had been achieved in Phase I. 
Nevertheless, in several categories of performance, CONDOR 
was unable to achieve even the reliability it had demon- 
strated during the initial testing. 

Such was the presumption of an early and favorable 
production decision, however, that in briefing Dr. Currie's 
Principal Deputy, Mr. Robert Parker, on January 28, 1976, 
Rockwell Missile Systems Division personnel displayed a 
chart showing a favorable production decision during April 
1976. In testimony before the subcommittee, the CONDOR 
Program Manager, Captain Kowalskey, stated that he was 
planning for the second DSARC Review on May 1. 

Later, in a May 1976 revision of the Decision Coordi- 
nating Paper, it was noted that the changes in the CONDOR 
program as a result of the November 4 action memo had added 
an estimated 180 days to the contract delivery period, 
an additon which would not "significantly impact" the planned 
deployment of CONDOR. Even more significantly, the DCP noted 
that a contract had already been signed on April 1 initiating 
the first phase of the CONDOR production plan and that 
approval of the Production plan "...is required no later than 
15 June 1976 to avoid a break in the program effort." 

This consideration was to drive all subsequent events 
related to the CONDOR. 

Results of the Phase II operational evaluation were not 
available before May 12 when Admiral Monroe released a sum- 
mary of highlights of this second phase. Among several limi- 
tations on the scope of his testing cited by Admiral Monroe 
was the fact that only three of the missiles used had the 
fin control modification which had been developed the year 
before. Only two of these three were subjected to "captive- 
carry" tests and only one was actually fired. Hence, he noted 
confidence in the test results on this modification was low. 

Nevertheless, after some confusion as to whether a DSARC 
would be held at all, it was announced on May 24 that the 
meeting would take place on June 8. On June 3, the Navy's 
own Systems Acquisition Review Council (DNSARC) met and 
agreed to recommend what it had recommended the year before: 



95 



(1) initial low rate production of five missiles per month 

(2) follow-on testing of the first production hardware; and 

(3) deferral of full approval for service use pending 
successful completion of follow-on testing. 

On the following day, as part of the normal DSARC 
preparations, the Acting Deputy Director for Test and Eval- 
uation in DDR$E forwarded to the offices of the principals 
a summary report on the Phase II evaluation results. This 
summary compared the Phase I and Phase II results and is 
significant on several counts: 

(1) In Phase II, the missile did not live up to the 
acceptance thresholds established for it and, in terms of 
squadron acceptance, did not even meet the standard achieved 
in Phase I; 

(2) Only one missile was fired to test the modifi- 
cation of the fin control, providing, as Admiral Monroe 
noted, low confidence in the reliability of this modifi- 
cation, earlier deemed crucial for CONDOR; 

(3) The summary stated that the standard for missile 
probability of completing five flights had not been speci- 
fied during Phase I nor had the missile been evaluated in 
these terms, although Admiral Monroe's report on Phase I 
issued earlier clearly states a standard of 801 probability 
and notes that the missile had a high probability of sur- 
viving five flights but that its probability diminished 
rapidly thereafter; 

(4) The missile had surpassed the threshold for Mean 
Time Between Failures (MTBF) , although this standard had 
been set for Phase II at the same level achieved in Phase 
I. Moreover, of the four different methods Admiral Monroe 
had employed to calculate this figure, DDT^E selected the 
highest one (84 hours) rather than the lowest (45 hours) . 

(5) The pod also surpassed the Phase II threshold, 
which again had been set at the same level as actual per- 
formance in Phase I, but it still did not meet the standard 
originally established, falling 501 below the original goal. 

(6) The line test set fell far below the Phase II 
standard set for it, although this standard had been re- 
vised downward drastically. 

(7) The aircraft (A-6) modification kit had no thresh- 
old or goal established for it in Phase II but fell far 
short of the goal and level established during Phase I. 



96 



The narrative portion of this June 4 memo was as guard- 
ed in its observations as these results dictated. However, 
on the day of the DSARC itself, the Deputy Director for Test 
and Evaluation submitted a new memo as an addendum to the one 
prepared by his subordinate during his absence on June 4th. 
In the addendum, he was at some pains to explain "...the 
wide disparity between the reliability thresholds shown in the 
table for Condor OPEVAL Phase I and Phase II..." Basically, 
the explanations were that (1) the Navy and OSD had agreed 
to the new, albeit often lower, test standards, (2) some 
of the modifications needed in certain items of equipment 
had not been incorporated, with the result that reliability 
improvements were not to be expected, and (3) other items 
of equipment had undergone extensive use during Phase I, use 
which accounted for their poor performance in Phase II. 

At the second DSARC -- called "DSARC IIIB" -- the 
principals were somewhat different from those who attended 
the September meeting. Dr. Bennett continued to chair the 
proceedings but was now Principal Deputy Assistant Secretary 
for Installations and Logistics, instead of Acting Assistant 
Secretary. Dr. Currie absented himself and, to represent him, 
sent instead his Principal Deputy, Mr. Robert Parker. 

Former Assistant Secretary Sullivan had left the depart- 
ment and his position had been abolished, being replaced by 
an Office of Planning and Evaluation headed by a director 
and subordinated to DDR$E. At the last moment, the new direc- 
tor, Mr. Edward Aldridge, was called away and his office had 
no representative at the DSARC. Assistant Secretary (Comp- 
troller) McClary again attended, as did Chairman Margolis 
of the Cost Analysis Improvement Group and Lieutenant General 
Lotz, the Deputy Director for Test and Evaluation and author 
of the memo explaining the apparently low results on the sec- 
ond round of CONDOR reliability testing. 

Apparently, the DSARC accepted the representations of 
the Navy that it had "addressed" all of the requirements of 
the November 4 action memo which had removed the stringent 
requirements initially proposed by the DSARC Chairman. After 
an abbreviated presentation by the Navy program manager, it 
issued a recommendation for CONDOR production. 

The action memorandum which the DSARC forwarded the 
following day for Secretary Clements' signature, however, 
contained a requirement for the Navy to "... include a 
thorough evaluation of CONDOR'S operational utility and its 
ability to penetrate enemy air defenses..." , although the 
DSARC directive and the November action memo required de- 
terminations on these critical points prior to a favorable 
recommendation to proceed into production. 



97 



The June memo further required that results of this 
evaluation, along with the results of continued reliability- 
testing, be forwarded to the Deputy Director of Test and 
Evaluation in DDR§E. Its final paragraph delegated the 
monitoring of the CONDOR program to the Navy upon comple- 
tion of a pending revision to the DCP. (See Exhibit E) 

Whatever doubts lingered, whatever questions estab- 
lished for DSARC III resolution remained, the predictable 
goal was achieved: the CONDOR had been given the produc- 
tion go-ahead in time to avoid a break in the program. 
(See Exhibit F) 

Accordingly, with the same speed that had marked the 
DSARC IIIB and the forwarding and signing of the June ac- 
tion memo, correspondence was prepared and dispatched on 
June 10 to the President of the Senate and the Speaker of 
the House to inform them that the Department of Defense 
planned to release the funds for the procurement of the 
CONDOR. (See Exhibit G) 



98 



June 10, 1976 



MEMORANDUM FOR THE SECRETARY OF THE NAVY 
SUBJECT: AGM-53B- CONDOR MISSILE PROGRAM 



A CONDOR Program Review was conducted on 8 June 1976 to review 

the readiness of the missile to proceed with initial production. The 

Chairman of this program review and the other DSARC Principals 

have expressed high confidence to me that the CONDOR weapon 

system will meet with success during the production and future 

deployment phase. 

The review confirmed that the reliability tests required by my 
4 November 1975 memorandum have been adequately completed. 
Although the weapon control system line test set did not achieve 
reliability demonstration objectives, I recognize that the required 
test set redesign is complete and will be evaluated during Follow-On 
Test and Evaluation (FOT&E). 

Therefore, I authorize the Navy to proceed with low rate production. 
I also concur with the Navy's proposal to conduct additional test and 
evaluation prior to initiating full rate production. CONDOR weapon 
system equipment (missiles, control pods, aircraft kits and the 
redesigned line test set) from initial production will be subjected to 
test and evaluation to firmly establish that acceptable reliability has 
been demonstrated in the production configurations. 

The Navy will provide a follow-on test plan to the Deputy Director 
(Test and Evaluation) by 1 March 1977 for review and coordination 
within OSD. The FOT&E must include a thorough evaluation of 
CONDOR'S operational utility and its ability to penetrate enemy air 
defenses. Further, upon completion of the FOT&E, a report on the 
test results will be made to the Deputy Director (Test and Evaluation) 
for a determination as to their adequacy to support a decision 
for an increased production rate. 



EXHIBIT E 



99 



I am aware that the CONDOR Decision Coordinating Paper No. 14 
is being updated to reflect current program status, acquisition plans 
and programmatic goals/thresholds. Upon successful completion of 
this activity, DSARC/DCP surveillance will be transferred to the 
Navy. Unless program thresholds are breached, the Navy will be 
responsible for conduct of any subsequent reviews. 



Signed 

W.P. Clements Jr. 



Prep: RThomas/c/9 June 76 
OASD(I&L) -WM/2B341/57072 
Signer: SecDef 



EXHIBIT E (cont.) 



100 



3. The DSARC III Rcwcu v-'. d:;lion/5eplov.-.ic-nt ) 

a. At the DSARC III review leading to the production/deployment 
decision, the following shall be determined: 

(1) The defense system still satisfies a military need and its 
performance properly relates to the mission, the threat, 
planning and policy guidance, and anticipated resources- 
considering changes that have occurred since the previous 
Secretary of Defense decision. 

(2) Test results, based on development test and initial operational 
test and evaluation (IOT&E), are adequate to support a decision 
to proceed with major production, and plans and schedules for 
remaining testing are adequate as provided in DoD Directive 
5000.3 (reference (c)). 

(3) Quantity, resource and schedule estimates are still realistic 
and acceptable. Relative cost estimates of support and 
operation have been evaluated (e.g., 10 year cost) where 
relevant. The cost estimates for both acquisition and support 
have been validated by independent assessment (DoD Directive 
5000.4, reference (d)). 

(4) The defense system is cost-effective for both acquisition and 
support compared with competing alternative ways of satisfying 
the mil itary need. 

(5) System tradeoffs have produced a proper balance between cost, 
schedule and performance, including reliability and maintain- 
ability. 

(6) Program thresholds in the DCP are well defined. 

(7) Production quantity requirements are valid. 

(8) Issues concerning production, logistic support, facilities and 
maintenance are identified id plans for their resolution are 
sound. 

(9) The program management structure and plan are sound. 

(10) All major problems have been revealed and solutions to 
residual risks have been identified. 

(11) The acquisition strategy and contract plan are consistent with 
program characteristics and risks and the approach to con- 
tractor selection is sound. The proposed contract type and 
options, if any, provide DoD flexibility for increasing or 
decreasing the production rate and total quantity. 

(12) Requisites for future production decisions have been defined 
and competition (e.g., second source and/or breakout) has been 
considered. 

(13) The plan for transition to production and deployment is 
adequate including integration with existing operational 
systems. 



EXHIBIT F (excerpt from dod dir, 5000.26) 



101 



SECRETARY OF DEFENSE 

WASHINGTON. D C 20301 



JUN 1 B7( 



Honorable Nelson A. Rockefeller 
President of The Senate 
United States Senate 
Washington, D. C. 20510 

Dear Mr. President: 

The appropriation, "V/eapons Procurement, Navy" in Title IV of the 
Department of Defense Appropriation Act, 1976, Public Law 94-212 
requires the Secretary of Defense to make a determination and advise 
the Congress prior to the obligation of funds (above $15,000,000) 
appropriated by the Act for procurement of the CONDOR weapon 
system. 

On 8 June 1976, the Defense Systems Acquisition Review Council con- 
ducted a program review of the CONDOR weapon system. This review 
was conducted in order to assess the results of the most recent special 
test program to confirm the reliability of the system. 

I am pleased to report that the CONDOR weapon system has successfully 
completed the special testing and is ready for initial production* With 
one exception, CONDOR met or exceeded the reliability thresholds 
established by the Deputy Director (Test and Evaluation). The missile 
achieved a Mean Time Between Failure (MTBF) of 34 hours against a 
threshold of 21 hours. The Airborne Missile Control System Pod achieved 
a MTBF of 37. 4 hours against a threshold of 26 hours. Depot level and 
squadron level rates were. also consistent with the established thresholds. 
No failures were experienced on the redesigned fin actuator, which was the 
most unreliable item in previous test3. The line test set reliability re- 
mained unsatisfactory. However, this was not unexpected, since the 
line test set had been previously identified as requiring redesign and that 
activity is now complete. 



SENATFs OCViMlTTSS ON 

The entire CONDOR system will be subjecTe?t5~ti5jS^mal; Follow -On 
Operational Test and Evaluation (FOT&5J)j^jhen production Hardware is 
available. Necessary contractual safeguards 'have* been established to 

UlteisEinrEil 1 

APPROPRIATIONS 



EXHIBIT G 



102 



ensure that the reliability requirements of the production hardware will 
be achieved. The Navy will review the program again following FOT&E 
to approve acceleration of the production rate. 

Based upon my review of the program and the positive results of the 
special reliability tests, I hereby determine and certify that the CONDOR 
weapon system is ready for initial production. In parallel with this letter, 
I have authorised the Secretary of the Navy to proceed with CONDOR 
procurement in accordance with the provisions of Public Law 94-212. 

Sincerely, 



EXHIBIT G (cont.) 



IV. CONFLICT OF INTEREST IMPLICATIONS 
contractor's position 

To understand the actions taken by the various participants 
throughout the CONDOR decision process, it is necessary first 
to understand the differing goals of these individuals and 
organizations. The goals of the prime contractor, Rockwell 
International's Missile Systems Division (MSD) , are perhaps 
the easiest to understand. As the contractor on this system, 
MSD stood to realize the greatest gain from a successful tran- 
sition into production. Without a production decision, the 
company would gain relatively little from its years of work on 
the CONDOR. 

On the other hand, any type of production decision, whether 
for limited or full production, regardless of the "extras" that 
would be included in the missile, would enable the company to 
begin increasing its sales level and would open the door for 
future contract revisions and increased CONDOR buys. 

It is difficult to overestimate the importance of this 
program to the prime contractor. Rockwell has suffered a 
prolonged slide in funding from the Department of Defense. 
From a high of more than $1 billion per year for at least 
three consecutive years during the early 1960s, Rockwell slid 
to a low of less than $500 million in fiscal year 1971. Since 
then, the company's contracting total has come back slightly, 
due in large part to increased funding for the B-l bomber, but 
it has never totalled more than $819 million annually in 
defense contracts since fiscal year 1965, and has never since 
approached the early 1960s level in terms of constant dollars. 

This decline is due in large part to the loss of business 
in the aircraft field and the company's failure to compensate 
by gains in missile production. Except for its B-l contracts, 
the company has not had an aircraft production contract since 
the end of A-5 production and the termination of the B-70 
bomber in the 1960s. Likewise, the company has had very little 
position in the missile field. At the time of the essential 
CONDOR production decisions, Rockwell International was not the 
prime contractor for any other missile systems that were either 
in production or near that threshold. 

The CONDOR was, therefore, a "foot in the door" for Rock- 
well International. As the first of what was anticipated to be 
a family of long-range air- to- surf ace missiles, the CONDOR stood 

(103) 



104 



to establish Rockwell's MSD firmly in a lucrative new area 
of production. 

Attainment of any sort of production decision would have 
gone a long way toward assuring this desired result. Given the 
"modular" concept for the CONDOR stressed by the Navy and the 
contractor, the company would have been in a position to pro- 
pose add-ons, improvements, and design changes to extend CONDOR'S 
range or provide all-weather capability. The basic production, 
plus the design changes, would have assured MSD a constant stream 
of orders for CONDOR- related work. 

The company's documents reflect this attitude. At every 
critical decision point, the company opted for that course of 
events which would be most likely to retain the program in some 
recognizeable form and continue its progress toward a production 
decision. 



The Navy's position was not unlike that of the contractor, 
although the stakes were not nearly so high. Most elements of 
the Naval Air Systems Command (NAVAIRSYSCOM) and the Office of 
the Chief of Naval Operations (OPNAV) were in favor of the stand- 
off capability that the missile would provide. This preference 
is not uncommon. The military services nearly always want to 
produce a weapon if the technology exists to allow its production 
In the opinion of one senior OSD official, though, the Navy 
stands out even by comparison with other services. Dr. Leonard 
Sullivan, former Assistant Secretary of Defense for Program 
Analysis and Evaluation (PA§E) testified before the Subcommittee 
on Investigations that: 

The Navy has had a problem for the last ten 
years, at least, in coming up with a balanced means 
of spending the monies which they could get. And 
there was increasing concern in my mind, as long as 
I served in that job, that there was a general un- 
willingness on the part of the Navy to settle for 
something they could afford rather than always 
pressing for the best that technology could provide. 
Amongst the four services, the Navy was relatively 
unique in continuously pressuring for the very best 
of everything, regardless of its cost... The Navy 
simply could not understand that the funds that we 
were given by the Congress were limited, and there- 
fore their own aspirations should be limited. 



105 



It is not surprising, therefore, to learn through MSD 
documents that the Navy Project Manager and the contractor 
considered themselves to be, in essence, teammates cooperating 
together to overcome their adversaries at OSD, the General 
Accounting Office, and the Congress. It was, in fact, the 
realization of precisely this spirit that led to the creation 
of the DSARC review process. It was felt that only by reviewing 
all weapons systems at the critical decision points could OSD 
retain effective control over the weapons acquisition process 
and enforce some system of priorities. The assumption that 
most elements of the Navy and the contractor would support con- 
tinued, and if possible accelerated, funding for weapons sys- 
tems has made it all the more important that the DSARC members 
exercise true independent judgment. 

THE DSARC PRINCIPALS 

Dr. Leonard Sullivan, ASD (PA§E) , one of the four DSARC 
members, was characterized by Rockwell as a "dissenter." He 
testified that, in his opinion: 

If the Navy were permitted to take the 
CONDOR missile into their operational inventory, 
it should be done on the basis of a specialized 
weapon which only a few aircraft should be 
equipped to drop and a few pilots trained to 
operate . 

Dr. Sullivan further testified that, given its high price and 
specialized mission, he believed that it should enjoy extremely 
high reliability which it had not yet demonstrated, in his 
opinion, at the time of DSARC IIIA. In the post-DSARC delib- 
erations, he stated that "It is a prime candidate for total 
cancellation if budget restrictions persist." 

Dr. John Bennett, at that time Acting Assistant Secretary 
of Defense for Installations and Logistics (I§L) , was likewise 
one of the major program critics. He stated in his testimony 
that he was concerned about the missile's reliability, cost- 
effectiveness, and production readiness. He also acknowledged 
that he was "heavily weighing" a recommendation to cancel the 
program totally. He further stated that his position had been 
reflected in the original I§L draft action memorandum (see 
Chapter III), which established stiff guidelines and require- 
ments which would have to be met before the CONDOR could be 
considered ready for production. 

The position of Terence McClary, former Assistant Secretary 



106 



of Defense (Comptroller) , changed in the course of the de- 
liberations over the CONDOR in 1974 and 1975. Prior to 
DSARC III, Rockwell officials considered the Comptroller 
to be one of the "three big dissenters". Furthermore, Mr. 
McClary testified before the subcommittee that he had been 
concerned about the reliability of the whole system, the 
Navy's management of the program, the vulnerability issue, 
the cost-effectiveness of the system in view of the small 
number of missiles being procured and the production sched- 
ule. 

At the DSARC III presentation in September 1975, Mr. 
McClary stated that many of his questions regarding the 
program were answered by the Navy. Thereafter, he said, 
he was able to support the CONDOR program. 

Several other witnesses stated that Mr. McClary normally 
favored a "clean" decision - either proceeding with production 
or cancelling - but disliked endlessly re-studying and stretching 
out programs. Mr. McClary agreed that this was generally his 
position, but explained that, with regard to CONDOR, this was 
modified by two factors relating to the DSARC process and to 
the program's apparent inability to proceed in a "clean" fashion. 
He stated that: 

Generally, programs do not move in quite 
so forthright a manner. That is certainly a 
preference, to have a black and white decision. 
That was not the case with CONDOR, and has not 
been since I have been familiar with the program. 

He further explained that, due to the consensual nature 
of the DSARC process, "people cannot adhere to rigid specific 
views and still arrive at a consensus." 

All three of these DSARC principals, regardless of their 
viewpoints on the system, indicated that the program was one 
which they did not devote a great deal of personal attention. 
Dr. Sullivan stated this most clearly in his testimony: 

My staff member, Mr. [Thomas] Christie... 
was an awful lot closer to this day by day than 
I was . . . I think it is very hard for you to under- 
stand, sir, the degree of aggregation with which 
we have to go at many of these programs, at least 
at my level, and to us, at least to me, the CONDOR 
was almost a program of secondary interest. In 
other words, it was still less than $1 billion, 



107 



and we had, you know, $175 or $150 billion 
worth of programs . 

It is important to point out that the so-called program 
critics, unlike the supporters, had little or nothing to gain 
from opposing or raising questions about the program. Unlike 
the contractor, which had the greatest stake in the program's 
success, and the Navy, which also stood to benefit from CONDOR 
production, the OSD "dissenters" stood to gain little from their 
opposition. 

DDR&E PRINCIPALS 

On the other hand, Dr. Currie and Mr. Parker, senior 
officials of the Directorate of Defense Research and En- 
gineering (DDR§E) , were always regarded by Rockwell Interna- 
tional as among the prime supporters of the program, as in 
the November 3, 1975 Internal Letter from MSD Marketing 
Vice President P.G. Paraskos to Division President J.F. 
Reagan: "Len Sullivan, PA§E, continues to attack the pro- 
gram, but the CONDOR supporters, Currie, Parker, etc., are 
off-setting his negative thrusts." Similar comments are 
contained in the "CONDOR Status and Program Strategy" manual 
presented by the MSD on November 11, 1974. (See Chapter III ) 
On the same page that the plan to "neutralize" the "three 
big dissenters" (OASD/Comptroller , 0ASD/PA§E and the House 
Appropriations Committee) is discussed, Dr. Reagan notes 
that the company should "support Currie, Parker" in the 
presumably favorable DDR$E inputs toward OSD concurrence. 
Later in the briefing book, Dr. Reagan appears to indicate 
the company's belief that Dr. Currie and Mr. Parker can be 
counted on to provide some assistance to the company's 
"neutralization of OSD PA$E and Comptroller." 

The testimony of Dr. Currie and Mr. Parker, as well as 
the internal DoD documents and Rockwell documents reviewed by 
the Subcommittee on Investigations show that, at each of the 
four crucial decision points (1974 reclama actions, DSARC IIIA 
and the action memorandum coordination process, 1975 reclama 
actions, and DSARC IIIB), the contractor had a plan calculated 
to maintain support for the program so that it could proceed to 
the next phase. The documents and testimony further indicate 
that the company anticipated personal support from Dr. Currie 
and Mr. Parker, or for institutional support from DDR$E. The 
documents and testimony further indicate that, in each of these 
cases, Dr. Currie, Mr. Parker and/or DDR§E provided that support. 

The company did not attain the most desired result at each 
of these decision points. However, the documents clearly indicate 



77-936 O - 76 - 



108 



that, throughout the process of adjustment and negotiation, 
a result was obtained which had at least some of the desired 
effect and at least obtained the most important goal: survival 
and progress toward production. The documents also show that 
DDR^E's assistance was important, if not crucial, to the at- 
tainment of these ends. 

During the 1974 reclama actions, the company's documents 
reflect an identity of interests between DDR§E and the con- 
tractor. One document, a letter from MSD President J.F. Reagan 
to Autonetics Group President M.D. Margolis dated August 6, 1974, 
seems to indicate that Dr. Currie was providing the contractor 
with advice as to contacts it should make in selling the program: 
"It was Dr. Currie's suggestion that we continue to work the 
Congressional area and to attempt to get information directly 
to Senator McClellan, Chairman of the Senate Appropriations 
Committee; this is underway." In addition, available documentation 
suggests that Dr. Currie proposed a plan to seek a higher level 
of CONDOR funding from the Congress than had been requested by 
the Secretary of Defense. 

Again, during the crucial weeks after DSARC IIIA, when 
the final action memorandum was being hammered out, the tes- 
timony and documents provided to the Subcommittee on Inves- 
tigations show that the contractor was working closely with 
DDR$E and that the DDR§E proposals were in general accord 
with the wishes of Rockwell. It is apparent that DDR§E, 
under the direction of Dr. Currie and his Principal Deputy, 
lent support to the contractor's effort to rebut the negative 
findings of the OPTEVFOR. From as early as May 8, 1975, 
and on no fewer than six occasions before the signing of the 
final DSARC III action memorandum, Rockwell documents refer 
to DDR§E contacts to obtain rebuttal arguments against the 
OPEVAL findings or DDR$E cooperation in the dissemination of 
such information. 

In drafting of the final action memorandum, DDR§E again 
seems to have supported a program also desired by the contractor, 
with input from the contractor at some critical points. The 
succession of status reports from Marketing Vice President 
Paraskos to MSD President J.F. Reagan during the critical post- 
DSARC period when the principals were hammering out the final 
agreement are instructive: 

MSD is working with appropriate Navy/OSD 
personnel to counter the negative thrusts 
made by COMOPTEVFOR (Admiral Monroe) to 
properly present all the information on 
reliability, quality control, inspection, training 
etc. , to permit the long lead production program with 



109 



the necessary test and evaluation to assure a reliable 
rate production effort. The probable outcome will be ; 
follow-on test and evaluation with a low rate initial 
production which will ultimately provide a full rate 
production program. (6 October 1975) 

MSD is continuing to work with the cognizant Navy and 
OSD personnel to properly respond to the OSD I§L and 
PA§E thrust against CONDOR on 'reliability and pene- 
trability.' ...This latest 'reliability' data is being 
disseminated and reviewed with all the pro-Condor 
elements within the Navy and OSD to make certain we 
overcome the adversaries (Mr. Bennett, OSD I§L and 
Len Sullivan, PA$E) and support Dr. Currie, DDR$E/T§E, 
Robert Parker, his deputy, and Mr. Terence McClary, 
the Comptroller. (13 October 1975) 

MSD is assisting Navy and OSD decision-makers to 
promulgate a directive that does call for an optimum 
CONDOR position with necessary follow-on test and 
evaluation and initial long lead low rate production 
(20 October 1975) [emphasis in original] 

MSD, in working with Navy decision-makers and OSD 
DSARC principals, has provided the catalyst necessary 
to place the OPEVAL data in proper perspective .. .OSD 
is staffing the final directive for the Secretary of 
Defense signature. The program probably will be the 
refurbishing testing (validation phase) and long lead 
production with the low rate initial effort with 
follow-on test and evaluation prior to full rate 
production. It is also significant to note that this 
was the original kind of program that was discussed 
last June and July in properly estimating the awards, 
sales and profits for Condor. (27 October 1975) 

MSD continuing to work with the Navy and OSD personnel 
to assist in staffing the final directive on Condor. 
Latest position confirms previous information, i.e. 
refurbishment with assurance testing and long lead 
funds for a production program. Len Sullivan, PA§E, 
continues to attack the Condor program, but the 
Condor supporters, Currie, Parker, etc., are off- 
setting his negative thrusts. (3 November 1975) 



110 



From testimony that the principals gave about their 
activities, and from the documents reviewed by the committee, 
it is evident that the "appropriate OSD personnel" contacted 
by Rockwell were primarily located within the Directorate of 
Defense Research and Engineering. Rockwell continued to 
regard ASD (I§L) and PA§E as enemies at this point, and there 
has been no suggestion that the Comptroller played anything 
but a passive role in this process. So, by process of 
elimination, DDR§E must be regarded as MSD's prime OSD contact. 

The contrast between these attitudes and those of 
another DSARC member are worthy of note. Former Assistant 
Secretary Sullivan, when asked whether he had had occasion 
to discuss DSARC results with representatives of the con- 
tractor, stated: 

No, no, I made a practice of not seeing 
the contractors during that period of 
time . 

One additional factor concerning these internal communica- 
tions is extremely important. Mr. Paraskos , the Marketing Vice 
President for Rockwell's MSD , knew of internal DoD discussions 
as they happened. Even while working on its current conflict 
of interest investigation, subcommittee investigators were 
informed personally by Mr. Parker that the draft decision memo- 
randa were internal DoD matters which could not be released 
to the subcommittee (although the subcommittee was permitted 
to examine such documents in the department) . The contractor, 
which had no official standing in these processes _, was apparently 
permitted to witness and participate in these deliberations . 
This suggests the possibility of "giving preferential treatment," 
which is specifically prohibited by the departmental standards 
of conduct directive. 

In his actions relating to the successful attempt to reclama 
the 1975 Office of Management and Budget (0MB) decision to delete 
CONDOR funding, Dr. Currie apparently lent assistance to the 
contractor. As stated earlier, the committee has been denied 
access to the relevant documents, but available documentation 
suggests that Dr. Currie selected the CONDOR (which accounted 
fo-r less than $100 million of the proposed $6.5 billion OMB 
cutback) out of more than a dozen programs that had been can- 
celled or cut back, and personally wrote the Deputy Secretary 
to plead for restoration of funding. The Rockwell documents 
suggest that this step was taken at the company's request. 
In his testimony, Dr. Currie suggested that his action was 
impelled solely by his desire to execute the wishes of the 
department, but his apparent failure to protest similar cuts 
in other programs desired by the department suggests special 
interest in the CONDOR program. 

That Dr. Currie was an advocate of the CONDOR and that 



Ill 



this was not an unusual position for him was attested to by 
several of the witnesses who appeared before the subcommittee 
As Mr. Thomas Christie stated it: 

Dr. Currie was, has always been in 
favor of the program. Since I think I have 
known Dr. Currie in the years I have been 
here he has been an advocate of CONDOR, which 
is not unusual. He believed in the require- 
ment for stand-off and believed firmly that 
the weapon was a rather unique weapon and the 
Navy needed the weapon, and we had an op- 
posite view. 

In addition, former Assistant Secretary Sullivan 
testified that: 

Well, certainly there were pressures, 
as there always are in the Pentagon, to pro- 
ceed as fast as possible to get these weapons 
into our inventory. There was pressure, of 
course, from the United States Navy, who saw 
it as a very desirable weapons system, and 
there was lesser, and I must add normal, 
pressure from the research and development 
community who really only consider their 
efforts to have been successful if the weapon 
proceeds on to production. 

Among the major participants in the CONDOR decision- 
making process, then, there was virtual unanimity on the 
question of the need for a stand-off capability. There 
was also near unanimity on the fact that the CONDOR, in 
its complete configuration at least, was potentially a 
technologically unique system. 

Where the participants disagreed was on the issues of 
(1) whether the CONDOR as it existed in 1975 could actually 
fulfill the Navy's requirement; (2) whether it was capable 
of performing up to its design specifications; (3) whether 
it was fully ready for production in view of (a) its small 
warhead, (b) its lack of a low cost data package, a multi- 
mode seeker, and penetration aids, (c) its recurring relia- 
bility problems; and (4) its high over-all cost, both in abso- 
lute terms and as compared with alternative systems. 

Other witnesses before the subcommittee testified, as 
did Mr. Sullivan, that advocacy of a production decision was 
not unusual for individuals, like Dr. Currie, who represented 
the research and development community. 



112 



What makes Dr. Currie's activities seem unusual, there- 
fore, is not so much his advocacy of an early and favorable 
production decision for a system about which there were so 
many severe and persistent doubts in other quarters, as it 
is the special assistance that he gave to the contractor, 
Rockwell International, above and beyond the requirements of 
his position as Senior Technical Adviser to the Secretary of 
Defense and his position as a DSARC Principal entrusted with 
ensuring that "...the advice given to the Secretary of Defense 
is as complete and as objective as possible." 

Dr. Currie's intervention on behalf of the CONDOR is 
unusual (1) in that he advised Rockwell International on how 
to approach the Congress during the 1974 consideration of 
the budget and apparently advocated funding in excess of that 
requested by Secretary Schlesinger; (2) in that he assumed 
the responsibilities of the DSARC Chairman during the develop- 
ment of the action memo in October 1975 and succeeded in pre- 
venting any significant delay in production; and (3) in that 
he gave special attention to assuring that the CONDOR system 
survived the 1975 OMB recommendation to delete it from the 
President's budget, again apparently working in concert with 
Rockwell International officials. 

In summation, the Office of Defense Research and Engineer 
ing, and particularly its Director, Dr. Malcolm Currie, at 
every crucial decision point on the CONDOR program, showed an 
unusual degree of interest in the continued survival of the 
program, and promoted CONDOR production. The DDR§E efforts 
stand in sharp contrast to the effort exerted by the staffs 
of the other three DSARC principals, and the principals them- 
selves . 



113 



INFLUENCING PROCUREMENT OFFICIALS 

The CONDOR procurement history is riddled with sugges- 
tions of preferential treatment by government officials for 
the contractor. The number of officials connected with the 
CONDOR program who were entertained by the company, and the 
frequency with which they were entertained, suggest that this 
entertainment may have been part of a concerted effort on the 
contractor's part to obtain favored treatment. 

Dr. Currie's case has been discussed at great length pri- 
or to this report. In 1975, he, his daughter and a friend 
were hosted by the company at a fishing camp in the Bahamas. 
Numerous other DDR§E and Navy officials connected with the 
CONDOR program were also entertained by Rockwell at a hunt- 
ing lodge in Maryland. These included: Captain Z.J. Kowal- 
skey, the CONDOR Project anager; Commander Kyle Woodbury, 
formerly of the CONDOR project office; J.M. Weisman, former- 
ly of the CONDOR project office; Brigadier General Conrad 
Stansbury, of the Tactical Warfare Programs Division of DDR§E; 
Rear Admiral Thomas McClellan, former Commander of the Naval 
Air Systems Command; C.W. Fritz, of the Office of the Depu- 
ty Chief of Naval Operations for Air Warfare (who, inciden- 
tally, was one of the Navy officials contacted by the company 
during the 1974 Congressional and budgetary reclama efforts) ; 
and Captain M.J. Katcher, former Navy Plant Representative at 
MSD's Columbus, Ohio, plant. 

The Department of Defense has interpreted these inci- 
dents as infractions of standards of conduct which have no 
impact on any of the officials' prior or subsequent actions, 
or, in essence, a "technical" violation. However, it was ap- 
parently not Rockwell's intention, in entertaining government 
officials, to spend money without receiving some benefit. 
Senior corporate officials have acknowledged that the company 
had a clear business purpose in mind when it provided this 
entertainment. The fact that the company continued to provide 
this entertainment for a number of years, and did not termi- 
nate such practices until it was ordered to do so by the Dep- 
artment of Defense, indicates that the company believed that 
these programs were of some benefit to the company. 

Robert Anderson, President of Rockwell International Cor- 
poration, acknowledged in testimony before the Joint Committee 
that the company hoped to establish good will for itself and 
its programs by offering hunting weekends and other forms of 
hospitality to government officials. There is, however, little 
substantive difference between "good will" and "influence". 
It is, at most, a difference of degree. Both terms imply 
that government officials are expected to consider criteria 
other than technical merit in making official decisions. 



114 



Mr. Anderson further acknowledged that he gave no orders 
that his employees should not attempt to discuss company busi- 
ness with their guests during the course of the hunting week- 
ends. On the contrary, he suggested that a "discussion of our 
capabilities as a company, perhaps the fact that we're in the 
commercial businesses and maybe are a little more inclined to 
be cost conscious ... to share mutual problems and possible 
solutions that we may have within the company" with government 
officials at such events would be entirely appropriate for of- 
ficials of his company. 

Additionally, both Mr. Anderson and Dr. J.F. Reagan, 
President of Rockwell's Missile Systems Division, acknowl- 
edged in sworn testimony that a further purpose of providing 
such favors was to "improve communications." There is not 
necessarily anything wrong with attempting to improve com- 
munications. However, such attempts in the context of inter- 
twined social connections, hunting and fishing trips hosted 
by the corporation, and dinners and hospitality suites paid 
for by the corporation, can have the effect of silencing 
voices that might otherwise advise caution. 



115 



SUMMARY 

The departmental directive on standards of conduct 
forbids giving, or appearing to give, preferential treatment 
to any person. The directive further prohibits actions which 
might create the appearance of losing complete independence 
or impartiality. It further prohibits making, or appearing 
to make, governmental decisions outside official channels. 
This part of the directive makes no reference to gifts, en- 
tertainment or gratuities - it simply states that such actions 
are forbidden. This study has presented evidence that viola- 
tions of all of these types may have occurred. For instance: 
Rockwell was privy to the draft action memoranda and the 
probable outcome; the Director of Defense Research and Engi- 
neering apparently wrote to the DEPSECDEF in 1975, protesting 
OMB budget cuts, but apparently appealing the decision of all 
the programs cut, on only one -- the CONDOR; the Subcommittee 
on Investigations was on two occasions denied information 
readily available to the contractor; the Director of Defense 
Research and Engineering in 1974 provided Rockwell with po- 
litical advice on the best methods for contesting Congres- 
sional actions unfavorable to the CONDOR; Dr. Currie, again 
in 1974 attempted to go beyond a Secretarial decision in 
restoring CONDOR weapon cuts. All of these actions involve 
a potential violation of departmental directives. 

The report has also discussed the acknowledged viola- 
tions of standards of conduct by many individuals in the 
CONDOR program, including Dr. Currie, who accepted enter- 
tainment from Rockwell. The report has suggested that the 
continual involvement of these individuals in this program 
after the violation, and in the case of Dr. Currie, the ac- 
tive support which he gave to the program, may have com- 
pounded the original violation. 

Such contacts, with government officials, in sum, can 
provide leverage and relative comfort for weapons system 
contractors, as they tend to blunt the normal tension that 
should exist between the buyer and the seller of any product. 
Such practices have long been accepted in commercial business, 
where citizens' tax payments are not involved and where the 
profit imperative can act as a control, but longstanding 
government policy has established that what is acceptable 
in private business may not be acceptable in government con- 
tracting. 

There is one important difference, however, between close 
contractor contacts with officials of the service acquisition 
manager, in this case, the Navy and similar arrangements with 
officials of the Office of the Secretary of Defense. To some 
extent, it is expected that the contractor and the service 
program managers will regard themselves as members of a team, 



116 



cooperating against adversaries ranging from OSD through Con- 
gress and the General Accounting Office. This is not to sug- 
gest that close social relations between contractor represen- 
tatives and service acquisition managers are permissible, but 
close official cooperation, at least, is necessary between 
these two elements. 

The Office of the Secretary of Defense, on the other hand, 
is required to be an objective analyst of competing systems, 
weighing benefits of different programs against budgetary con- 
straints. The DSARC mechanism was established to allow screen- 
ing of weapons systems at crucial stages by OSD representatives. 

The Department of Defense has shown a consistent insen- 
sitivity to the requirements contained in its own standards 
of conduct regulations. This is evidenced by the department's 
reaction to the first disclosures, in 1975, that large num- 
bers of high-ranking officials had accepted hospitality and 
entertainment from defense contractors. Instead of conducting 
a detailed investigation to determine the facts and circumstances 
of this case, the department initially accepted as the basis 
for a mass exoneration an across-the-board claim of close per- 
sonal friendship based upon an invalid interpretation of both 
the standards of conduct directive and the executive order 
which had established these provisions. The department did 
not seriously review this problem until after this error was 
pointed out to them. 

Furthermore, even when it has acknowledged that a vio- 
lation of standards of conduct has occurred, the Department 
of Defense has continued to regard such violations as some- 
how separable from a person's job performance. In every case 
that has been brought to the department's attention, including 
the case of Dr. Currie's entertainment by Rockwell at the 
company's island retreat, the department has found that the 
relationship in question had no probable effect on the person's 
performance of his duties. In many cases, the department has 
undertaken no serious inquiry to determine whether such 
was indeed the case, but more fundamentally, the department 
has committed an error by assuming that such a separation be- 
tween personal and professional dealings with a contractor 
is possible. The department seems to misinterpret applicable 
conflict of interest laws and its own regulations on this 
subject. The requirement to adhere to the very highest stan- 
dards of personal and professional conduct is a fundamental 
part of the job responsibilities of every federal employee. 
There is no such thing as a "technical" violation of standards 
of conduct. 



117 



The department has ignored the possibility that Navy- 
decisions on the CONDOR were tainted by the widespread 
entertainment by the company of Navy program officials. 
It failed to examine fully the circumstances surrounding 
Dr. Currie's entertainment to test the adequacy of his 
explanation. It failed to consider the conflict of in- 
terest problems in awarding an evaluation contract to 
Principia, a firm with links to Rockwell and the CONDOR 
system. The department has failed to assure that the 
DSARC will function in the independent capacity that was 
contemplated, and, in fact, has made proposals which would 
further dilute the independence of this body. 



V. FINDINGS AND RECOMMENDATIONS 



COMMITTEE FINDINGS 

1. Dr. Malcolm Currie and Mr. Robert N. Parker con- 
sistently appeared to show a degree of interest and personal 
involvement in the CONDOR program not commensurate with 

the requirements of their posts. 

2. The Directorate of Defense Research and Engineering, 
under the leadership of Dr. Currie and Mr. Parker, at times 
cooperated with the Rockwell International Corporation and 
its Missile Systems Division in an effort to support the 
CONDOR program and to rebut or undermine its critics. 

3. Dr. Currie personally intervened to minimize 
obstacles to CONDOR'S continued funding and eventual pro- 
duction. 

4. Quite apart from his acceptance of hospitality from 
Rockwell International President John Anderson, Dr. Currie 
maintained relations with the contractor and may have acted 
in its behalf to such a degree that questions could be raised 
as to whether he may have given preferential treatment to 
any person, may have lost his complete independence or im- 
partiality, or may have affected adversely the confidence of 
the public in the integrity of government, since his relation- 
ships clearly had an impact on decisions and since those re- 
lationships clearly related to the CONDOR program. 

5. Dr. Currie should have considered removing himself 
from Defense Systems Acquisition Review Council and all 
other CONDOR program deliberations and decisions immediately 
subsequent to his visit to the Rockwell facility in Bimini, 
since his failure to do so compounded the apparent violation 
of the departmental directive on standards of ethical conduct 
by creating an additional appearance of loss of complete 
independence or impartiality and of affecting adversely the 
confidence of the public in the integrity of the government. 
In addition, his conduct in this instance raised questions 
about using public office for private gain and making govern- 
mental decisions outside of official channels. 

6. A finding of a "technical" violation of the depart- 
mental directive concerning standards of conduct is never 
warranted, since any violation invites a presumption of a 
conflict of interest and of a serious breach by the violating 
employee of his contract with the government. 

7. Secretary of Defense Donald Rumsfeld was ill- 
advised and premature in accepting the finding that Dr. 
Currie "...acted contrary to the business interests of 

i 118) 



119 



Rockwell International." 

8. No evidence was adduced to support published 
allegations that Dr. Currie used his position in government 
to solicit employment in the private sector. 

9. The Defense Department and the military services 
have failed to institute meaningful and adequate safeguards 
for the weapons acquisition process that will protect the 
government's interest and isolate or remove officials from 
conflict of interest situations, while at the same time per- 
mitting the communications with government contractors neces- 
sary and desirable in procuring materiel for the national 
defense . 

10. The Defense Systems Acquisition Review Council has 
failed to fulfill satisfactorily its primary role of 
screening and making choices among service development pro- 
grams and has instead become primarily a mechanism for achieving 
consensus on technological and budgetary issues on which con- 
sensus does not always serve the best interests of the 
national defense. 

11. Recent changes and proposed changes in the Defense 
Department organizational structure (e.g. appointment of 

an Acquisitions Executive, downgrading of the Office of Pro- 
gram Analysis and Evaluation, and delegation of review authority 
over weapons development programs from the Office of the 
Secretary of Defense to the military departments) will fur- 
ther adversely affect the capacity of the Secretary to obtain 
independent and impartial judgments on weapons programs, expose 
the Acquisitions Executive to conflict of interest temptations 
and allegations, and reduce the necessary review of service 
programs by the Office of Secretary of Defense. 

12. The Department of Defense has failed to adopt 
procedures that would safeguard against institutional con- 
flicts of interest in the award of weapons system evaluation 
contracts, and has failed to adopt procedures which would in- 
crease the visibility of such situations so that contracting 
officers can be made aware of them. 



COMMITTEE RECOMMENDATIONS 

1. The committee recommends that the Department of Defense 
reconsider its finding that Dr. Currie was "the architect of a 
slowdown" in the CONDOR program and its finding that he "...acted 
contrary to the business interest" of Rockwell International. 



120 



2. The committee further recommends that the DoD 
consider establishing a formal, permanent, OSD-level Conflict 
of Interest Review Board, either as an independent directorate 
or within the Office of the DoD General Counsel, which would 

have the authority to propose new conflict of interest regulations 
and would be empowered to review the records of proposed de- 
partmental employees, active employees, and retired employees 
for conflicts of interest. 

3. The committee further recommends that the DoD 
reconsider recent policy decisions involving the reorganization 
of the Office of the Secretary of Defense, particularly with 
reference to a'-tj.ons which have the effect of downgrading 
independent analysis elements or which tend to consolidate 
weapons acquisition authority in the hands of one official. 

4. The committee further recommends that the department 
consider new procedures which will assure the integrity, 
independence and impartiality of the DSARC review process. 

5. The committee further recommends that the DoD 
consider procedures which would require that DSARC principals 
and other policy-makers absent themselves from all processes 
and decisions involving or potentially involving contractors 
with whom they were formerly employed. 

6. The committee further recommends that the DoD bring 
the rules of Armed Services Procurement Regulation Appendix 
G ("Avoidance of Organizational Conflicts of Interest") into 
agreement with the principles stated in the preamble to that 
part by adopting a new Part 5: 

"(5) No person or company may contract with 
the Department of Defense to evaluate a weapons 
system if that person or corporation, or any 
officer of such corporation, has had a con- 
tract, with the Department of Defense or any 
contractor associated with that system, to 
assist in the development, production or 
marketing of that system." 

7. The committee further recommends that DoD establish 
procedures that will increase visibility to contracting officers 
of institutional conflicts of interest such as those that occurred 
in connection with the CONDOR vulnerability study. 



121 

MINORITY VIEWS 

TO THE 

REPORT ON CONFLICT OF INTEREST 

AND THE 

CONDOR MISSILE PROGRAM 

SUBCOMMITTEE ON INVESTIGATIONS 

JOINT COMMITTEE ON DEFENSE PRODUCTION 



We are of the belief that the report by the Subcom- 
mittee on Investigations on Conflict of Interest and the 
CONDOR Missile Program is so lacking an evidentiary basis 
we cannot endorse it. 

The report unfairly and arbitrarily exposes certain 
high government officials to ridicule and scorn by its 
incautious presentation of the evidence. 

A review of the report, supporting documents and tes- 
timony of witnesses lead us to the following conclusions 
which we will discuss in even further detail below: 

I. Findings 1 through 3 suggest that 
specific actions by Dr. Malcolm Currie and 
Mr. Robert N. Parker were wrongful. It is 
grossly inferred that some evil and hidden 
intent exists. This suggestion is based 
only upon the committee's selectively pre- 
senting an intermittent paralleling or mu- 
tuality of interest among Dr. Currie, Mr. 
Parker, the Navy and its CONDOR Missile 
Program and Rockwell International. 

The bare indication that individuals 
at times may seek a mutual result is a 
woefully inadequate standard by which to 
judge them and infer, as the report does, 
that wrongdoing or a conspiracy exists. 

II. Finding 4 strongly implies that Dr. 
Currie acted in Rockwell's behalf and states 
he "may have given preferential treatment" 
to it. No evidence is offered which estab- 
lishes that Dr. Currie acted any differently 
in regard to the CONDOR than he did within 
the DoD acquisition context, toward any 
other weapon or aircraft program. In fact, 
testimony not included in the report shows 



122 



the virtual unanimity that the procedures 
adopted by Dr. Currie and others were "nor- 
mal." We find offensive the clear but un- 
stated suggestion that the cause of this 
alleged "preferential treatment" was a 
pleasure trip to a Bimini Rockwell Inter- 
national fishing resort with his daughter 
and a friend who was a friend of many years 
of Mrs. Robert Anderson, wife of the Rock- 
well International President. 

III. Finding 7 and Recommendation 1 
criticize Secretary of Defense Donald Rumsfeld 
for being "ill-advised and premature in ac- 
cepting the finding that Dr. Currie was the 
architect of a slowdown in the CONDOR program 
and '...acted contrary to the business inter- 
ests of Rockwell International.'" The report 
fails to give adequate recognition to the ex- 
tensive, singular, and commendable effort by 
Secretary Rumsfeld in this and other conflict 
of interest actions. The Majority tends to 
ignore the fact that the Navy wanted a full 
production decision for the CONDOR yet because 
of the negative reaction to this by Dr. Currie 
and others it was not forthcoming. 

We do not, by specifically dissenting from the above 
findings mean to imply, necessarily, acceptance of any of 
the other findings. 

To the extent that a narrow and appropriately specific 
case may be made for Recommendations 6 and 7 of the neces- 
sity of safeguards against the organizational conflict of 
interest as highlighted by the Principia case study we en- 
dorse those recommendations. 1 

But we note, as stated before, that adequate evidence 
does not exist which would lead to the recommendations that 
call into question the actions of the Secretary of Defense 
in running his department. 



1 It should be noted that the Secretary of Defense shares our 
concern in this regard. The Department of Defense General Coun- 
sel, on 22 September 1976, outlined a procedure whereby prospec- 
tive contractors should be required to identify the existence 
of such conflicts prior to award, certify no such conflicts exist, 
and monitor and report any conflicts which develop during contract 
performance. The adoption of these or similar procedures is 
under review within the Department. 



123 



Apart from the specific criticisms noted above there 
are other troublesome aspects to the report which can be 
discussed in a more summary fashion rather than the detailed 
explanation that follows. 

First, the report fails to recognize the purpose of the 
Defense System Acquisition Review Council. The Council's 
duty is to determine whether the system proposed for produc- 
tion by the service is, in fact, ready for production. In 
this way it acts as a restraining influence upon the appetites 
of the services and their weapons programs for the ever scarcer 
defense dollar. This understanding is crucial to an appreciation 
of the fact that Dr. Currie, a proponent of the requirement for 
a stand-off missile, such as the CONDOR, as well as many other 
technologically competitive weapons, was against the full pro- 
duction of CONDOR contrary to the wishes of the service in- 
volved, the Navy. That he did not share the full antipathy 
toward the CONDOR and call for its cancellation as did Dr. Leonard 
Sullivan, then Assistant Secretary of Defense (Program Analysis 
and Evaluation), should not diminish Dr. Currie's opposition to 
a production decision. 

Second, it is important not to lose sight of the role of 
Dr. Sullivan in regard to that of Dr. Currie. Dr. Sullivan, 
whose former office comprises the resident skeptics within the 
Pentagon has duties very different from that of the Office of 
Defense Research and Engineering. Dr. Currie's office, is, 
and should be in constant contact with contractors for it is 
within industry not the Pentagon, or in government laboratories 
that almost all research and development takes place. 

Finally, consider, before turning to the specifics, below, 
that Dr. Currie was severely admonished and required to forfeit 
one month's pay for his trip to Bimini. He has been the subject 
of several adverse news articles 2 and, in our belief has been 
adequately censured without the further embarrassment of this 

also admitted he "exercised bad 
more specific detail are 



report for his conduct. He has also ac 
judgment at the time." 3 Below in even 



2 Although Dr. Currie's admonishment was not generated by press 
exposure, a number of articles were written as a result. A num- 
ber of allegations in these articles have proven to be false. 
One, among a number of these specific, and unproven, allegations 
is that the committee found no evidence to support the allegation 
that Dr. Currie used his position to look for a job. 

3 See Appendix 2. 



(7-936 O - 76 



124 



three theses put forth by the committee which we believe tend 
to give the entire report a bad odor. 

I. Is a mere parallelling of objectives with. Rockwell 
International adequate proof to suggest wrongdoing on Dr. Currit 
part? 

As stated above the committee's first three findings are 
based on a standard of proof that is not acceptable in our 
legal system. The clear, and impermissible inference the 
reader is asked to draw is that: 

1) Because Dr. Currie and his deputy, Mr. 
Parker, were personally involved in the 
CONDOR Missile Program (as was their 
official duty); and, 

2) Sometimes discussed the program with the 
prime contractor, Rockwell International; 

3) This personal involvement and interest 
should translate all their actions on the 
CONDOR into "'acting on behalf of Rockwell 
International . " 

What can be inferred from the evidence submitted by the 
committee is that: 

1) Dr. Currie, among many others in the Depart- 
ment of Defense, sought the development of 
the CONDOR to fill the Navy's requirement 
for a stand-off missile; and, 

2) At certain points the concerns of Rockwell 
International and Dr. Currie and his staff 
joined to meet that objective; and, 

3) When joined, the objective of Dr. Currie was 
to develop the CONDOR Missile Program, and 
not to further the interests of Rockwell 
International . 

The committee's report, by selecting certain events and 
attributing to them importance beyond their naked value, seeks 
to color all that follows. 



The best example of this practice is the internal letter 
from J.F. Reagan, Rockwell International's Missile Systems 
Division President, to Rockwell Group President M.D. Margolis. 



' See pp. 22-23, Supra, 



125 



Dr. Currie in this August 6, 1974 letter is mentioned in the 
following manner: 

The other input which I got directly from 
Dr. Currie this morning described the reclama 
which he prepared to maintain full and total 
support for the program. Dr. Currie stated he 
would immediately pursue the matter to ascertain 
the real status . 

Aside from the lack of any suggestion in the letter that 
Dr. Currie prepared the reclama at Dr. Reagan's behest which 
might prove up the committee's charge of "acting on behalf of 
Rockwell International" we fault the use of this document on 
additional grounds. 

First, although the committee had this letter in its posses- 
sion when Dr. Reagan testified, he was not asked about it. As 
troubling as that may be, even more troublesome is that Dr. Currie 
was not asked to confirm or deny the truth of the document. 

Second, we view with suspicion the truth of this letter and 
other Rockwell documents because they are obviously self-serving 
statements from subordinates to their superiors. 

In conclusion, this document is a very weak reed with 
which to begin a cumulative inspection of a particular course 
of conduct on the part of Mr. Parker and Dr. Currie. 

The committee also does not include in its report a document 
submitted to it by Dr. Currie during his testimony which would 
tend to show that sometimes Dr. Currie acted against the business 
interests of Rockwell. On June 21, 1974 Dr. Currie sent a mem- 
orandum to the Assistant Secretary of the Navy (Research and 
Development) , expressing his overall concern about the CONDOR, 
and, particularly its high cost. He also noted that so-called 
"frills" being planned for the CONDOR, such as a costly multi- 
mode seeker and data link were not to be considered at the up- 
coming Council review. 

In short, there is no "proof," within the accepted meaning 
of that term to make the connection that Dr. Currie was acting 
out of regard for Rockwell International's commercial interests 
only out of common concern that the Navy's requirement for a 
stand-off missile be realized. Rather there is proof that Dr. 
Currie has acted against those very commercial interests. The 
committee report confuses this obvious, yet critical distinction. 



126 



II. Were Dr. Currie's actions "unusual" "preferential 
treatment" or of "special assistance" ' to Rockwell? 

The committee concludes at various points in the report 
that Dr. Currie's actions in regard to the CONDOR Missile Pro- 
gram were somehow out of character for him or a man in his 
position. 

We disagree with these conclusions for the following 
reasons . 

First, they are viewed out of context from the other 
defense acquisition actions taken by Dr. Currie and others. 
Before it can be judged unreasonable or unusual, under the 
circumstances it must necessarily be established first what 
is normal or reasonable. 

The committee in its conclusions in this regard proceeds 
by intuition, rather than reason. It has inquired only into 
the case of the CONDOR missile and can not, from that isolated 
example, extend this to knowledge of all acquisition decisions. 
Neither, we believe, does the committee's report provide any 
evidence by witnesses expert in procurement which would provide 
a framework within which to judge, as it does, that Dr. Currie 
or Mr. Parker's actions were peculiar to Rockwell International 

Second, in. contrast, witnesses" before the committee ex- 
pressed virtual unanimity that actions in regard to the CONDOR, 
including Dr. Currie's, were "normal." 

The chief opponent of the CONDOR Missile Program, Program 
Analysis and Evaluation staffer Thomas P. Christie, noted: 

...the context of the CONDOR DSARC is not 
unusual in that arena [other DSARCs] , in 
that you will have some organization some- 
times take exception to proceeding full 
speed with the program, and in that partic- 
ular case, if I recall, Mr. Sullivan was 
adamantly opposed to proceeding full speed 
with the program going into full production. 



5 p. 112, Supra. 

6 p. 118, Finding 4, Supra. 

7 p. 112, Supra. 

8 Former Assistant Secretary (Program Analysis and Evaluation) 
Leonard Sullivan was not asked specifically whether any actions 
were abnormal or unusual. He did testify in a general manner 
that disagreements were the order of the day. See Sullivan 
transcript p. 11 and Supra p. 111. 



127 



...It is not unusual for the other organization 
to take an opposite view. So we had a situation, 
we had opposing views as to how to go forward 
with the program. 

Since I think I have known Dr. Currie in the 
years I have been here he has been an advocate 
of CONDOR, which is not unusual. He believed 
in the requirement for [a] stand-off [capability] 
and believed firmly that the weapon was a rather 
unique weapon and the Navy needed the weapon, 
and we had an opposite view. 9 

On the issue of whether it was unusual for the Defense 
Research and Engineering staff to prepare their own version of 
the draft decision memorandum and advocate a position, Dr. John 
Bennett, then Acting Assistant Secretary (Installations and 
Logistics) expressed himself thusly: 

QUESTION: Would it be normal for other DSARC 
principals besides the chairman and 
his office to prepare draft decision 
memos following a DSARC? 

DR. BENNETT: Yes, and I have done it myself. 

QUESTION: Would it be normal for other principals 
to help to persuade other DSARC members 
to adopt this position? 

DR. BENNETT: I think that would be normal. I discussed 
and attempted to provide advocacy on 
various points on things in programs I 
felt strongly about. I have spoken, 
for example, to Mr. Sullivan in the 
case of the F-16 program about various 
aspects that I thought I felt strongly 
about, and I would have to answer that 
question that I think that is normal. 

QUESTION: Were you not aware that other DSARC 
principals were preparing memos? 

DR. BENNETT: Yes, and that is normal, particularly 
the staff members and representatives 



Testimony of Thomas P. Christie before the Subcommittee on 
Investigations, Joint Committee on Defense Production, Congress 
of the United States, September 16, 1976, pp. 1-8, 1-9. 



128 



of the principals 



10 



As to further reasons why Dr. Currie had his staff prepare 
a draft decision memorandum, Ronald Thomas, who worked for Dr. 
Bennett, testified: 

I think that one could say that the draft 
that was prepared by DDR§E was to shorten 
that ...[the coordination] .. .process , but 
I think it quite clearly was to try to 
reach an agreement that was acceptable to 
everybody . - 1 - 1 

Mr. Thomas' comment is an apparent reference to the fifteen 
day coordination time following a Review Council allowed by 
Defense directions. 

Briefly, Dr. Currie's own view of his actions in the 
CONDOR program review process was that he "didn't have any 
personal knowledge of ... [the] ... program" 13 but that, "as a 
part of the normal procedure, my staff members would have 
gone out and visited Rockwell, to their factory, to discuss 
it... [the program]... 1 ^ with them." 

On the ultimate question whether the CONDOR missile should 
go into full production Dr. Currie stated his opposition to the 
view held by then Assistant Secretary Comptroller Terence McClary 

Secretary McClary, as a matter of fact wanted 
to adopt the full production plan of the Navy 
as I recall, and certainly as the senior 
technical expert in the Department of Defense, 
I probably conveyed my own views that it was 
not ready to go into production because of the 
specific technical problems on the gyro bearing, 
in the magnetic clutch in the fin actuator and 
so on. Those were the kinds of things that we 



Testimony of John J. Bennett before the Subcommittee on Inves- 
tigations, Joint Committee on Defense Production, U.S. Congress, 
September 8, 1976, p. 2-34 

11 Testimony of Ronald D. Thomas before the Subcommittee on Inves 
tigations, Joint Committee on Defense Production, U.S. Congress, 
September 8, 1976, p. 1-38. 

12 See Appendix 10. 

13 Testimony of Malcolm Currie before the Subcommittee on Inves- 
tigations, Joint Committee on Defense Production, U.S. Congress, 
September 9, 1976, p. 1-27. 

lh Op. ait, p. 1-28. 



129 



would have discussed normally, as we do 



on every program. 



15 



Dr. Currie additionally testified that although he was 
"not personally involved Ml °in drafting the 1975 reclama to 
OMB of a budget cut for the CONDOR "it would have been normal 
for him [Deputy Secretary of Defense Clements] to turn to his 
staff Ml Jto do so. "There is nothing out of the ordinary about 
that," l8 Dr. Currie stated, although he did not recall who, if 
anyone, in the office of Defense Research and Engineering 
might have drafted the reclama for Deputy Secretary Clements. 

In contrast to Dr. Currie' s testimony the committee concludes 
that "his apparent failure to protest similar cuts in other pro- 
grams desired by the department suggests special interest in 
the CONDOR program. ul 9But this conclusion fails to take into 
account two facts relevant to the issue of "preferential treatment 

First, that the CONDOR was the only program still in the 
development stage that was cut from the budget in 1975 by OMB. 
Therefore the CONDOR was the only program under Dr. Currie' s 
control that was affected by the budget cutbacks. 



15 


Op.cit, p. 


1-26, 


1-27 


16 


Op . ait 3 p . 


1-34 




IT 


Ibid. 






18 


Op.cit, p. 


1-33 





19 

p. 110 Supra. This particular page also contains another 

conclusion which is an apparent misreading of a document. 

That particular sentence reads: "[t]he Rockwell documents 

suggest that this step ...[Dr. Currie's request for a reclama]... 

was taken at the company's request." The Rockwell document 

referred to appears at pp. 82-83 supra and, in fact, reads in 

relevant part as follows: 

MSD, working with [Rockwell] Washington Office 
personnel and particularly J.H. Garrett, was 
successful in having top level Navy and OSD 
support in the reclama to the OMB action. 
Specifically, two letters were sent to Secretary 
of Defense Donald Rumsfeld from the Secretary of 
the Navy and Dr. Currie of DDR$E completly sup- 
porting and protecting the Condor program. In addi- 
tion Dr. Currie took on the unilateral action by 
OMB as completely uncalled for. [emphasis added] 

It is obvious from this comparison that nowhere in the above 
document is there any "suggestion" that Dr. Currie asked for the 
reclama of the contractor's "request." 



130 



Second, then Assistant Secretary of Defense (Comptroller) 
Terence McClary testified that he was personally involved in 
preparing the reclama memorandum for Deputy Secretary of Defense 
Clements. 

QUESTION: Well if I understand you correctly, 
there was a reclama memo that your 
office or you prepared that, you 
believe, mentioned CONDOR as one of 
several items? 



MR. McCLARY: That would have been a line item in this 
letter that I sent to the Secretary. 
Normally this particular letter that I 
am talking about -- and it is dated No- 
vember 24, 1975, from me to the Secretary 
of Defense on the results of the President's 
review of the FY 1 77 budget -- normally, 
these are considered internal budgetary 
documents not available to anyone. 

Unfortunately, this particular document 
somehow was leaked outside the building, 
it was recorded in the press and has been 
in the Congressional Record. 20 

It is our belief that before concluding that what transpired 
in the development of the CONDOR missile was unusual or that Dr. 
Currie gave "preferential treatment" to a defense contractor a 
cautious review of the evidence is required. We conclude that 
this was, unfortunately, not the case. 



III. Should Secretary Rumsfeld reconsider hii 
about Dr. Currie? 



findinc 



The obvious answer, we believe to the above question is no. 

The Committee report in Finding 7 found that Secretary 
Rumsfeld "was ill-advised and premature in accepting the finding 
that Dr. Currie ...' acted contrary to the business interest of 
Rockwell International.'" In Recommendation 1, the Committee 
calls on the Department of Defense to "reconsider its finding 
that Dr. Currie was 'the architect of a slowdown' in the Condor 
program and its finding that he'... acted contrary to the 
business interest' of Rockwell International." 



70 Testimony of Terence E. McClary before the Subcommittee on 
Investigations, Joint Committee on Defense Production, September 
16, 1976, p. 1-24. 



131 



The above stem solely from a paragraph which appears in a 
letter dated June 7, 1976 from Secretary Rumsfeld to Senator 
Thomas Eagleton in response to allegations in a news article. 
The paragraph in the letter is as follows: 

--Dr. Currie was, in fact, the architect of 
the plan accepted by Mr. Clements not to approve 
production of CONDOR as proposed by the Navy, but 
rather to delay production pending further tests 
related to missile reliability and to limit Govern- 
ment liability to $10 million during this phase. 
This is the action that you praised in your remarks 
in the Congressional Record of November 13 wherein 
you published the staff memorandum to Mr. Clements 
and his decision memorandum. Dr. Currie, therefore, 
acted contrary to the business interests of Rockwell 
International in his action. 

Before turning to the merits of the Findings and Recom- 
mendations it is necessary to note that Secretary Rumsfeld, 
contrary to the quoted section in Recommendation 1, did not 
find that Dr. Currie was "the architect of a slowdown." 

Rather, the Secretary found precisely what the facts were 
as to the plan that Dr. Currie had constructed. We believe 
that the statement in the letter comports with the facts as we 
know them. Dr. Currie did the things the letter states, namely, 
he did: 

1) construct a plan approved by Mr. Clements 
which did delay production for some months; 

2) require further tests related to missile 
reliability; and, 

3) limit government liability to $10 million 
during this test period. 

The report does not dispute the elements of Dr. Currie's 
plan, only that it did not "significantly" delay production. 

It is our view that Dr. Currie's plan sought the best of 
both worlds. 

Delays in production are expensive and, if unnecessary, 
are to be avoided so as not to further burden the taxpayer. 
But certain reliability tests were necessary in Dr. Currie's 
view so a full production go-ahead was rejected out of hand. 
These tests could be expensive and require additional missiles 
be produced to perform the tests. Dr. Currie's plan, unlike that 
offered in the October 2 draft decision memoranda prepared by 
the Installations and Logistics staff, flatly stated that no 
new missiles were to be produced until the missile tested 
satisfactorily. 



77-936 O - 76 - 10 



132 



For the above reasons Rockwell International was denied 
something which it wanted very much and from which it hoped 
to make money -- full production go-ahead in the fall of 1975. 
We do not know the specific dollar loss it experienced as a 
result nor can we speculate, but at the very least, the un- 
certainty of a production decision and the stigma attached to 
the delay did cause Rockwell to lose face in defense industrial 
community and, possibly, potential investors. 

In conclusion, we should note that if evidence had shown 
that someone in the Department of Defense had engaged in betraying 
a position of trust to further the business interests of a de- 
fense contractor we would sadly but willingly take part in 
denouncing him. 

But we do not find this to be the case here and so must 
disagree. 



John Tower, Texas 



Edward W. Brooke, Massachusetts 



Garry Brown, Michigan 



Albert W. Johnson, Pennsylvania 



Al 

S^'r'S^ APPENDIX 1 

£ ,.■• GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE 

:_'. % . ^ -;. J >j' WASHINGTON. P. C. 2030) 

^^L£-^ March 16, 1976 

MEMORANDUM FOR THE FILES 
RE: Malcolm R. Currie 

This Memorandum is intended to summarize the facts, as I under- 
stand them, relating to a visit by Dr. Currie on Labor Day weekend 1975 
with a friend and Dr. Currie's 13-year old daughter, to Bimini, the 
Bahamas, to a residence owned by North American Rockwell Corporation. 

Dr. Currie had traveled with his daughter prior to the weekend to 
visit his son in the Virgin Islands. Dr. Currie's friend had previously 
arranged for Dr. Currie's daughter to travel to Bimini to visit the 13-year 
old daughters of Mr. and Mrs. Robert 3. Anderson. In response to an 
invitation from Mrs. Anderson, Dr. Currie decided to join the party at. „ 
the last minute at Miami. Mr. Anderson was then, and is now, President 
and Chief Executive Officer of North American Rockwell Corporation. 
Dr. Currie's friend was a friend of many years standing of Mrs. Robert 
Anderson. 

The purpose of the weekend was for Dr. Currie 's friend and 
Mrs. Anderson and the three young girls to get together. Mr. 'and Mrs. 
Anderson, Dr. Currie and his friend and the three girls flew in a North 
American Rockwell corporate aircraft from Miami to Bimini for the 
weekend. 

Dr. Currie states that at no time was any official or corporate 
business of either this Department or Rockwell discussed. 

After the second night, the same party as on the trip from Miami 
to Bimini flew again in the Rockwell corporate airplane from Bimini to 
Washington. 

Several days after the return flight, Dr. Currie gave his friend a 
personal check for $150. 00 to deliver to Mrs. Anderson to cover 
Dr. Currie's own equivalent of commercial airfare and food and related 
expenses associated with his stay at Bimini. Because of the long-standing 
personal relationship between Dr. Currie's friend and Mrs. Anderson, 
that check was never delivered. 



Richard A. Wiley 



a2 



APPENDIX 2 
THE SECRETARY OF DEFENSE 

WASHINGTON. O. C. 20301 



March 16, 1976 



Honorable Malcolm R. Currie 

Director, Defense Research and Engineering 

The Pentagon 

Washington, D.C. 20301 

Dear Dr. Currie: 

This letter will confirm our conversation this date 
relating to a visit by you on Labor Day weekend, 1975, with 
a friend and your daughter, to Bimini, the Bahamas, to a 
residence owned by North American Rockwell Corporation. 
Such visit occurred at the same time as, and to a certain 
extent in the company of, Mr. and Mrs. Robert B. Anderson. 
Mr. Anderson was then, and is now, President and Chief 
Executive Officer of North American Rockwell Corporation. 

The facts relating to your visit are set forth in 
the attached Memorandum dated March 16, 1-976, prepared by 
the General Counsel of the Department, and I understand 
that you have reviewed that Memorandum and agree that the 
statement of relevant facts as set forth is complete and 
accurate. 

Your action, as summarized in the Memorandum, is 
directly contrary to the specific provisions of the 
Department of Defense Directive prohibiting acceptance of 
gratuities from Defense contractors. You were aware- that 
the aircraft in which you flew from Miami to Bimini and 
from Bimini to tvashington was a North American Rockwell 
Corporation corporate aircraft. You were also av;are that 
Mr. Anderson was then President and Chief Executive Officer 
of North American Rockwell Corporation. 

All Defense Department personnel are expected to conduct 
themselves in such a manner as will insure that the public 
has confidence in the integrity of the Government. All 
personnel are required to refrain from any activity which 
directly or indirectly places, or even appears to place, 
them in a position of conflict between their private 
int- :ests and the public interests of the United States. 



A3 



To maintain the public trust, the relationships of 
DoD personnel with Defense contractors must be above 
reproach, and their conduct must demonstrate impartiality 
and objectivity in all such dealings. In particular, 
acceptance of gratuities, even if motivated by personal 
friendship, is inconsistent with this standard. 

I accept your statement that notbing relating, directly 
or indirectly, to the business of this Department was dis- 
cussed by you with Mr. Anderson during the Labor Day week- 
end visit or the two airplane flights in connection with 
that weekend. I understand that there is no evidence of 
any improper influence as a result of your activities on 
the weekend in question. 

Under all of the circumstances and in view of the high 
position held by you, and the nature of the responsibilities 
exercised by you, in the Department of Defense, I am taking 
the follov.-ing action, as we have discussed, with regard to 
your conduct in this matter: 

1. You are severely reprimanded £or participating in 
this activity in the manner and under ±he circumstances 
summarized in the attached Memorandum. 

■2, As we discussed, I understand that you will forfeit 
four weeks' salary. 

3. As we further discussed I understand that you will 
reimburse North American Rockwell Corporation for the full 
value at equivalent commercial rates, to be determined by 
the General Counsel of this Department,, for the two airplane 
flights of your daughter and yourself ajid for the accommodations 
and related expenses of the several-day stay in Bimini of both 
of you. 

The consequences of your action can reflect. adversely on 
this Department. I appreciate your substantial contributions 
to this Department and anticipate that you will continue to 
render valuable services to us. At the same time, I fully 
expect that there will not be any future events similar to 
the event which has led to my action set forth in this letter. 



Sincerely , 




a4 



Statement of Malcolm R. Curric 

I fully recognize the great public trust that is vested in my 
position and the necessity to avoid situations however 
innocent v/hich could detract from that trust in the public eye. 
In this instance, I exercised bad judgement at the tine and I 
sincerely regret it. 

I will continue executing my responsibilities as Director of Defense 
Research and Engineering with dedication. 



a5 



APPENDIX 3 

THE SECRETARY OF DEFENSE 

WASHINGTON O C 2Q3CM 



June 7, 1976 



Honorable Thomas F. Eagleton 
United States Senate 
Committee on Appropriations 
Washington, D. C. 20510 

Dear Tom: 

Your letter of April 5th raises questions about Dr. Malcolm Currie 
in connection with the CONDOR missile program and job offers from 
industry. The letter, as well as your remarks on the floor as reported 
in the Record for April 6th, is based, as you have stated, on the New 
York Times article of April 5th that we believe contains substantive 
errors. 

Based on our investigation, these are the facts: 

Dr. Currie was, in fact, the architect of the plan accepted 
by Mr. Clements not to approve production of CONDOR as 
proposed by the Navy, but rather to delay production pending 
further tests related to missile reliability and to limit Govern- 
ment liability to $10 million during this phase. This is the 
action that you praised in your remarks in the Congressional 
Record of November 13 wherein you published the staff 
memorandum to Mr. Clements and his decision memorandum. 
Dr. Currie, therefore, acted contrary to the business 
interests of Rockwell International in his action. 

— Mr. Clements did not reverse Dr. Currie's recommendation, 
but approved it without change, and the GAO report was not 
received in the Department until after Mr. Clements' decision. 

Dr. Currie has not inquired about prospective employment 
with any Defense contractor. Dr. Currie was approached 
on various occasions by contractors suggesting possible 
arrangements for employment. In each case Dr. Currie 



a6 



BtateO that he is committed to stay at least through the 
present Administration and that he favors returning to 
commercial business from which he was recruited rather 
than to the defense industry. He has no present plans to 
leave Government service. 

In view of these facts, I believe you will agree with me that suspension 
of Dr. Currie is not warranted and that he should remain in the decision 
process. I would be happy to discuss this matter with you. 



Sincerely, 




a7 



APPENDIX 4 

DEPARTMENT OF DEFENSE DIRECTIVE 5500. 7, REPRINTED FROM THE CODE OF 
FEDERAL REGULATIONS, TITLE 32, CHAPTER 1, PART 40 "STANDARDS OF CONDUCT 



PART 40— STANDARDS OF CONDUCT 

3ec. 

40.735-1 Purpose and objectives. 

41.735-2 Applicability. 

40 735-3 Ethical standards of conduct. 

40.735-4 Bribery and graft. 

40.735-5 Gratuities. 

40.735-fl Prohibition of contributions or 
presents to superiors. 

40.735-7 Use of Government facilities, 
property, and manpower. 

40.735-8 Use of civilian and military titles 
In connection with commercial 
enterprises. 

40.735-8 Outside employment of DoD per- 
sonnel. 

40.735-10 Gambling, betting, and lotteries. 

40.735-11 Indebtedness. 

40.735-12 Information to personnel. 

40.735-13 P-cportlng suspected violations. 

40.735-14 Statement of employment and 
financial Interests. 

40.735-16 Conflicts of Interest laws. 

40.735-16 Military Assistance Program. 

Appendix A— House Concurrent Resolution 
175 (85th Cong., 2d Sess.) . 

Appendix D— Digest of Conflict of Interest 
Laws. 
Adthoritt: The provisions of this Part 

40 Issued under E.O. 11222 of May B. 1965, 

30 F.R. 6489. 3 CFR, 1965 Supp.; 5 CFR 

735.104. 

Source: The provisions of this Part 40 

appear at 31 F.R. 4989. Mar. 26. 1966, unless 

otherwise noted. 

§ 40.735— 1 Purpose and objectives, 
(a) This part prescribes the standards 

of conduct, relating to possible conflict 
between private Interests and officio] 
duties, required of all Department of De- 



fense personnel, 1 regardless of assign- 
ment. Close adherence to these prin- 
ciples will insure compliance with the 
high ethical standards demanded of all 
public servants. Violations of this part 
may be cause for appropriate disciplinary 
action which may be in addition to any 
penalty provided by law. 

(b) This part is In implementation of 
(1) Executive Order H222 of May 8. 1965, 
prescribing Standards of Ethical Conduct 
for Government Officers and Employees 
and (2) the Civil Service Commission 
regulations of October 1. 1965 (5 CFR 
Part 735). It is In consonance with the 
Code of Ethics for Government Service 
contained in House Concurrent Resolu- 
tion 175, 85th Congress, which applies to 
all Government personnel. (See Ap- 
pendix A to tills part.) 

(c) This part includes standards of 
conduct based on the revisions of the 
conflict of interest laws enacted in 19G2 
(Pi. 87-777 and P.L. 87-849) . (See Ap- 
pendix B to this part.) 

§40.733-2 Applicability. 

This part applies to all components of 
the DoD. 



1 DoD personnel, as used In this part, unless 
the context Indicates otherwise, means all 
civilian officers and employees. Including spe- 
cial Government employees, of ell the offices, 
agencies, and departments In the Depart- 
ment of Defense (Including nonappropriated 
fund activities) arjd all active duty officers 
and enlisted members of the Army, Navy. Air 
Force, and Marine Corps (officers Includes 
commissioned and warrant) . 



10 



a8 



Chapter 1 — Office of the Secretary of Defense §40.735-3 



§ 40.735-3 Ethical standards of conduct. 

(a) General. DoD personnel are 
bound to refrain from any private busi- 
ness or professional activity or from hav- 
ing any direct or Indirect financial In- 
terest which would place them In a posi- 
tion where there Is a conflict between 
their private Interests and the public In- 
terests of the United States, particularly 
those related to their duties and respon- 
sibilities as DoD personnel. Even though 
a technical conflict, as set forth In the 
statutes cited in this part, may not exist. 
DoD personnel must avoid the appear- 
ance of such a conflict from a public 
confidence point of view. DoD personnel 
will not engage In any private business or 
professional activity or enter into any 
financial transaction which Involves the 
direct or Indirect use. or the appearance 
of use, of Inside Information gained 
through a DoD position to further a pri- 
vate Interest or for private gain for them- 
selves or another person or entity, par- 
ticularly one with whom they have 
family, business, or financial ties. DoD 
personnel must not use their DoD posi- 
tions in any way to induce or coerce, or 
give the appearance of inducing or 
coercing, any person (Including subordi- 
nates) or entity to provide any financial 
benefit to themselves or another per- 
son or entity, particularly one with whom 
they have family, business, or financial 
ties. For the purpose of this paragraph, 
•"inside information" means information 
obtained under Government authority 
which has not become part of the body 
of public Information. This paragraph 
does not preclude DoD personnel from 
teaching, lecturing, and writing as auth- 
orized by § 40.735-9(d), nor does It pre- 
clude DoD personnel from having finan- 
cial Interests or engaging in financial 
transaction to the same extent as 
private citizens not employed by the 
Government so long as they are not 
prohibited by law or the regulations In 
this part. 

(b) Dealing with present and former 
military and civilian personnel. DoD 
personnel will not knowingly deal with 
military or civilian personnel, or former 
military or civilian personnel, of the 
Government, if such action will result 
In a violation of a statute or policy set 
forth In this part. 

(c) Membership in associations. All 
DoD personnel who are members or offi- 
cers of nongovernmental associations or 
organizations must avoid activities on 



behalf of the association or organization 
that are incompatible with their official 
government positions. 

(d) Commercial soliciting by active 
duty members of the military. Military 
personnel on active duty are prohibited 
from personal commercial solicitation 
and sale to military personnel Junior In 
rank or grade, at any time, on or off 
duty, In or out of uniform. Tills limita- 
tion includes, but Is not limited to, the 
personal solicitation and sale of life and 
automobile insurance, stocks, mutual 
funds, real estate or any other commodi- 
ties, goods or services. As used In this 
paragraph, "personal commercial solici- 
tation" refers to those situations where 
a military member is employed as a sales 
agent on commission or salary, and con- 
tacts prospective purchasers suggesting 
they buy the commodity, real or Intan- 
gible, that ne Is offering for sale. This 
prohibition is not applicable to the 
one-time sale by an individual of his 
own personal property or privately 
owned dwelling. It Is not the Intent of 
this paragraph to discourage the off- 
duty employment of military personnel, 
but it is the Intent to eliminate any and 
all instances where it would appear that 
coercion, intimidation, or pressure was 
used based on rank, grade, or position. 

(e) Assignment of reserves for train- 
ing. DoD personnel who are responsible 
for assigning Reserves for training 
should make an effort to assign them 
when they are on active duty for train- 
ing to duties In which they will not ob- 
tain Information that could be used by 
them or their employers to give them an 
unfair advantage over their civilian com- 
petitors. 

(f) Conduct prejudicial to the Gov- 
ernment. DoD personnel shall not en- 
gage In criminal, infamous, dishonest. 
Immoral, or notoriously disgraceful con- 
duct, or other conduct prejudicial to the 
Government. Moreover. DoD personnel 
shall avoid any action whether or not 
specifically prohibited by this part, 
which might result in, or create the 
appearance of: 

(1) Using public office for private 
gain; 

(2) Giving preferential treatment to 
any person; 

<3) Impeding Government efficiency 
or economy; 

(4) Losing complete Independence or 
impartiality; 

(5) Making a Government decision 
outside official channels; or 



11 



a9 



§ 40.735-4 



Title 32 — National Defense 



(6) Affecting adversely the confidence 
of the public In the Integrity of the Gov- 
ernment. 
§ 40.735-^1 Dril.cry nnd graft. 

In general. DoD personnel may be sub- 
ject to criminal penalties If they solicit. 
accept, or agTee to accept anything of 
value In return for performing or re- 
fraining from performing an official act 
(see 18 U.S.C. 201). 

§ 40.735-5 Gratuities. 

(a) Except as provided In paragraph 
(b) of this section. DoD personnel will 
not solicit or accept any gift, gratuity. 
favor, entertainment, loan, or any other 
thing of monetary value either directly 
or Indirectly from any person, firm, cor- 
poration, or other entity which: 

(1) Is engaged or Is endeavoring to 
engage In procurement activities or busi- 
ness or financial transactions of any sort 
with any agency of the DoD; 

(2) Conducts operations or activities 
that are regulated by any agency of the 
DoD; or 

(3) Has interests that may be sub- 
stantially affected by the performance 
or nonperformance of the official duty 
of the DoD personnel concerned. 

Gifts, gratuities, favors, entertainment, 
etc., bestowed upon members of the Im- 
mediate families of DoD personnel are 
viewed In the same light as those be- 
stowed upon DoD personnel. Acceptance 
of gifts, gratuities, favors, entertain- 
ment, etc., no matter how Innocently 
tendered and received, from those who 
have or seek business with the Depart- 
ment of Defense may be a source of em- 
barrassment to the department and the 
personnel Involved, may affect the ob- 
jective Judgment of the recipient and 
Impair public confidence in the integrity 
of the business relations between the 
department and Industry. 

(b) For the purpose of this section. 
a gift, gratuity, favor, entertainment, 
etc., includes any tangible item, Intan- 
gible benefits, discounts, tickets, passes, 
transportation, and accommodations or 
hospitality given or extended to or on 
behalf of the recipient. However, the 
restrictions In paragraph (a) of this sec- 
tion do not apply to the following: 

(1) Instances In which the Interests 
of the Government are served by partici- 
pation of DoD personnel in widely at- 
tended luncheons, dinners, and similar 
gatherings sponsored by Industrial, tech- 
nical, and professional associations for 



the discussion of matters of mutual In- 
terest to Government and Industry. 
Participation by DoD personnel is appro- 
priate when the host Is the association 
and not an Individual contractor. Ac- 
ceptance of gratuities, or hospitality 
from private companies In connection 
with such association's activities Is pro- 
hibited. 

(2) Situations In which the Interests 
of the Government are served by partic- 
ipation of DoD personnel In activities at 
the expense of individual defense con- 
tractors when the Invitation Is addressed 
to and approved by the employing agency 
of DoD. These activities Include public, 
ceremonies of mutual interest to indus- 
try, local communities, and the depart- 
ment, such as the launching of ships or 
the unveiling of new weapons systems, 
Industrial activities which are sponsored 
by or encouraged by the Government as 
a matter of U.S. defense or economic- 
policy, such as sales meetings to promote 
off-shore sales Involving foreign indus- 
trial groups or governments. 

(3) Luncheons or dinners at a con- 
tractor's plant, on an Infrequent basis, 
when the conduct of official business 
within the plant will be facilitated and 
when no provisions can be made for 
individual payment. 

(4) Situations in which, In the Judg- 
ment of the Individual concerned, the 
Government's interest will be served by 
participation by DoD personnel In activ- 
ities at the expense of a defense con- 
tractor. In any such case in which DoD- 
personnel accepts any gratuity, favor, 
entertainment, etc., either directly or In- 
directly from any person, firm, corpora- 
tion, or any other entity which is en- 
gaged or Is endeavoring to engage in 
business transactions of any sort with 
the department, a report of the circum- 
stances will be made within 48 hours by 
the individual to the designee of the 
Secretary of the military department 
concerned or the designee of the Secre- 
tary of Defense In the case of DoD per- 
sonnel not within one of the military 
departments. 

(5) Specialty advertising Items of 
trivial intrinsic value. 

(6) Customary exchange of social 
amenities between personal friends and- 
relatives when motivated by such rela- 
tionship and extended on a personal 
basis, [subsequently deleted) 

(7) Things available Impersonally to- 
the general public or classes of the gen- 



12 



AlO 



Chapter ! — Office of the Secrelaiy of Defense 



§ 40.735-7 



era] public such as a free exhibition by 
a defense contractor at a world's fair. 

(8) Trophies, entertainment, rewards, 
prizes, given to competitors In contests 
which are open to the public generally or 
which are officially approved for partici- 
pation in by DoD personnel. 

(9) Transactlons~between and among 
relatives which are personal and con- 
sistent v.-lth the relationship. ( deleted ] 

(10; The acceptance of loans from 
banks or other financial institutions on 
customary terms to finance proper and 
usual activities of employees such as 
home mortgage loans. 

(11) Social activities engaged in by 
officials of the department and officers 
In command or their representatives with 
local civilian leaders as part of com- 
munity relations programs. 

(12) Contractor-provided local trans- 
portation while on official business and 
when alternative arrangements are 
clearly impracticable. 

(13) Participation In civic and com- 
munity activities by DoD personnel when 
the relationship with the defense con- 
tractor can reasonably be characterized 
as remote, for example, participation in 
a little league or Combined Federal Cam- 
paign luncheon which Is subsidized by a 
concern doing business with a defense 
activity. 

(14) The acceptance of accommoda- 
tions, subsistence, or services furnished 
in kind in connection with official travel, 
from other than Defense contractors, 
when authorized by the order-issuing 
authority as in the overall Government 
interest. When accommodations, subsist- 
ence, or services In kind are furnished 
to DOD personnel by private sources, ap- 
propriate deductions shall be made in the 
travel, per diem, and other allowances 
otherwise payable to the personnel. DOD 
personnel may not accept personal re- 
imbursement from a private source for 
expenses incident to official travel, unless 
authorized pursuant to 5 US C. 4111 or 
other express statutory authority. 
Rather, any reimbursement must be 
made to the Government by check pay- 
able to the Treasurer of the United 
States; personnel will be reimbursed by 
the Government in accordance with reg- 
ulations relating to reimbursement. In 
no case shall DOD personnel accept- 
either in kind or on a reimbursable 
basis — benefits which are under prudent 
standards extravagant or excessive in 
nature. 



(c) Except as provided In paragraph 
(b)(12) of this section, personnel on 
official business may not accept contrac- 
tor-provided transportation, meals or 
overnight accommodations in connection 
with such official business so long as 
Government or commercial transporta- 
tion or quarters are reasonably available. 
Where, however, the over-all Govern- 
ment interest would be served by accept- 
ance by DoD members of such trans- 
portation or accommodations In specific 
cases, the order issuing authority may 
authorize It. 

(d) Procedures with respect to gifts 
from foreign governments are set forth 
in DoD Directive 1005.3. 

(e) Procedures with respect to Reserve 
Officer Training Corps Staff members 
are set forth in Part 92 of this sub- 
chapter. 

1 3 1 F.R. 4989, Mar. 28, 1986. aa amended at 
32 F.R. 12179, Aug. 24. 1967; 36 F.R. 22574, 
Nov. 25, 1971; 37 FR 26713, Dec. 16, 1972] 



13 




All 



APPENDIX b 

THE DEPUTY SECRETARY OF DEFENSE 

WASHINGTON. D. C. 20301 



JAN 15 1S75 



MEMORANDUM FOR: Secretaries of the Military Departments 
Assistant Secretaries of Defense 
Directors of Defense Agencies 

SUBJECT: Standards of Conduct (DoD Directive 5500.7) 



A recent newspaper article chronicled a Service sponsored 
"orientation tour" and implied that there was improper 
participation by Defense contractors. 

The article illustrates a need for renewed attention to the 
provisions of DoD Directive 5500.7. While a technical conflict 
with the Directive's prohibitions probably did not exist, DoD 
personnel must avoid even the appearance of such a conflict. 

In part the Directive states: "...DoD personnel will not solicit 
or accept any gift, gratuity, favor, entertainment, loan, or 
any other thing of monetary value either directly or indirectly 
from any person, firm, corporation, or other entity which. . . . (I)s 
engaged or is endeavoring to engage in procurement activities 
or business or financial transactions of any sort with any 

agency of the DoD " "For the purpose of this section, a gift, 

gratuity, favor, entertainmen t, etc., includes any tangible 
item, intangible benefits, discounts, tickets, passes, 
transportation, and accommodations or hospital ity given or 
extended to or on behalf of the recipient...." 

Let me emphasize that these prohibitions are not a matter of 
degree -- there will be absolutely no relationship with Defense 
contractors which violates, or appears to violate the provisions 
of DoD Directive 5500.7. 

We in the Department are the guardians of a public trust. 

To the extent that our relationships with Defense contractors 

are above reproach and we demonstrate impartiality and objectivity 

in our dealings with contractors, we will help to maintain 

that trust. 



a12 



Your personnel should be reminded of the provisions of 
DoD Directive 5500.7 and your implementing regulations at 
least semi-annually to assure their full awareness of the 
need for compliance in all respects 



ebpeLtb. v 



Al3 



APPENDIX 




MEMORANDUM FOR CORRESPONDENTS: 



OCTOBER 9, 1975 



No. U9U-75 



Hold for release until expected time of delivery at 9:30 p.m. EDT, 
October 9, 1975. 

Following is text of a statement to be made by Deputy Secretary of Defense 
William P. Clements at the National Security Industrial Association Dinner 
at the Sheraton-Park Hotel: 



I want to talk with you for a moment, 
the subject of standards of conduct. 



straight from the shoulder, on 



In the past few weeks we've taken some deserved lumps, both in the 
press and from the Hill, concerning relations between some of our people — 
senior people — and DoD contractors. I don't like it, the Secretary of 
Defense doesn't like it, and anyone involved or potentially involved, 
whether in Government of business, should be aware that we will not tolerate 
disregard of our clearly stated directives. 

Let me quote to you from a memo I sent to all Defense Agencies this 
past January: "...DoD personnel will not solicit or accept any gift, 
gratuity, favor, entertainment, loan, or any other thing of monetary value 
either directly or indirectly from any person, firm, corporation, or other 
entity which is engaged or is endeavoring to engage in procurement activities 
or business or financial transactions of any sort with any agency of Dod..." 
I went on in that memo to explain, quite explicitly, that by gift, gratuity, 
favor, or entertainment I meant any tangible item, intangible benefits, 
discounts, tickets, passes, transportation and accommodations or hospitality. 

Now, all of that seems pretty clear to me. Nonetheless, we're not 
very proud of the judgment apparently shown in this area by some of our 
people. And, as a businessman currently in Government, I'm not proud of 
the conduct of industry. In a phrase, "It takes two to tango." 



As most of you know, the bulk of my professional life has been in 
business. And, if you know anything of my public statements as Deputy 
Secretary of Defense, you know of my concern for the health of our industrial 
base and conviction that solutions to our defense production problems can 
and must be found in the traditional free enterprise system. Because I'm 
an advocate of a close and healthy working partnership between DoD and the 



Al4 



industrial sector, I'm particularly upset when indiscretions by our people 
or industry representatives damage that relationship. I find it impossible 
to envision a favor, ticket, or gratuity worthy of eroding the technological 
and industrial edge we enjoy over our adversaries. 

Our directives require that we avoid even the appearance of a conflict 
of interest. You must do the same. I would like to remind everyone here, 
as our people have been told, that we in the Department are, in a fiduciary 
role, the guardians of a public trust, and our relationships with Defense 
contractors must be above reproach. You in industry have the same 
responsibility. 



Al5 



APPENDIX 




NEWS RELEASE 

OFFICE OF ASSISTANT SECRETARY?OF|0EFENSE'(PUBLIC-AFFAIR 



FOR IMMEDIATE RELEASE 



WASHINGTON,^D:c: -;20301 
PLEASE NOTE DATE 



APRIL 8, 1976 



0X7-3189 (Cooiea 
0X5^192 £nfo) 
NO. 'lA6-76 



STATEMENT OF 
SECRETARY OF DEFENSE DONALD RUMSFELD 



- STANDARDS OF CONDUCT 



For some months there has heen a series of disclosures alleging 
various improper activities stretching over the past 15 years. The 
allegations have involved a number of Department of Defense employees — 
past and present — military and civilian. 

The allegations have included questions involving: 

(1) gratuities, such as entertainment at contractors* 
recreational facilities; 

(2) severance pay from contractors paid out during 
Government service, and/or arrangements for 
re-employment after completion of Government 
service; 

(3) conflicts of interest; and 

(A) waste or misuse of taxpayers' dollars. 
Actions taken by this Department in the recent past have included: 

— A policy memorandum in January 1975 stressing the 
problem of even an appearance of deviation from the 
Standards of Conduct; 

— A public admonition to industry given at the National 
Security Industrial Association semi-annual meeting 
on October 9, 1975; 

— Letters of admonition to offenders; 



— A Tri-Service Committee, established in October 
1975, to review Standards of Conduct; 

— A review of audit and contracting procedures; 

— Expanded audits of the Washington offices of ten 
major Defense contractors; 



(MORE) 



77-936 O - 76 - 11 



Aie 



— Recovery of improperly charged contractor costs; 

— A confidential inquiry to major DoD contractors on any 
gratuities that they provided to DoD personnel and a 
request for their cooperation in informing their employees 
of DoD standards of conduct; 

Emphasis on project manager responsibilities; 

— New specific rules established for the attendance of DoD 
personnel at industrial/military association activities; 

and 

The investigation of alleged infractions, company-by- 
company, individual-by-individual. 

Events of the early 1970's have, of course, led the Government, the 
public, and the press to focus more fully on the need for adherence to strict 
standards. With the swearing-in of President Ford on August 9, 1974, there 
should have been little doubt that the highest standards of conduct were 
expected of all persons employed by the Government or dealing with the 
Government. 

To the extent there remained any doubt in the Department of Defense, 
the Defense memorandum of January 15, 1975, made clear that there should 
be no relationship with Defense contractors which violates or appears to 
violate the prohibitions of our Directives. 

Since November 20, 1975, when I assumed this post, I have repeatedly 
emphasize^ m y views to officials of the Department, both as to their conduct 
and to their leadership responsibilities with respect to standards of con- 
duct throughout the Defense establishment. 

On November 24, 1975, two exceptions were removed from the 1967 Defense 
Directive, which had permitted customary exchanges of social amenities 
between friends and relatives and transactions between and among relatives 
which were personal and consistent with that relationship. 

In applying standards of conduct, I recognize that we are dealing 
with human beings who have rendered, and continue to render, dedicated and 
valuable service to this Department and to the country. I also recognize 
that public officials are not error-proof, that the rules, directives, and 
regulations can be complex, and that from time to time the norms of our 
society shift somewhat. However, understandably, public officials are held 
to a higher standard and must strive to live up to it. 

The test of an "arms-length" relationship is not easy. To do their 
jobs, those in Government must deal with those outside Government on a 
daily basis. Indeed, such a relationship is necessary to assure that 
Government is serving the nation well. The task — and it is not an easy 



Al7 



one — is to see that Interaction between those in Government and those with 
whom they must work, are extensive enough to assure the necessary exchange 
of information, but at the same time to see that they are not so intimate 
that they improperly affect the decision of Government. Indeed, improper 
appearances, alone, however innocent, can, in the present environment, so 
adversely affect public trust in Government that the effectiveness of Govern- 
ment is diminished. 

We must seek to balance these factors so that we do not so unduly 
complicate or inhibit the process of Government that good men and women 
refuse to participate — either in government or as contractors for the 
Government — out of fear that their reputations will be damaged by allega- 
tions involving an appearance of impropriety where none existed. 

I am determined that the conduct of military and civilian employees of 
this Department be consistent with requirements of law and regulations, 
just as I am convinced that Government must be able to attract the roost 
talented of our nation both as employees and as contractors. Our responsi- 
bilities to our national security and the people we serve require no less. 

A range of sanctions is available for military and civilian personnel, 
ranging from oral or written administrative admonishments or reprimands 
through suspensions with or without pay, to formal court-martial proceedings 
or prosecution by the Department of Justice. Determination as to the appro- 
priate action must be on a case-by-case basis. 

A list of management actions taken by the Department prior to November 20, 
1975, is available. Other actions have been taken since I became Secretary. 
Additional steps are now being taken to further emphasize Department standards 
and unambiguously inform military and civilian personnel, and individuals 
and firms doing business with the Department, as to those standards. They 
include the following: 

1. We have embarked on an effort to publicize the strictness of the 
Standards of Conduct Directive through in-hou.se and Service publications 
and media, including briefings on the standards of conduct as part of the 
training at various Service schools and courses. We are revising and further 
tightening the rules with regard to attendance of Department personnel at 
trade and industry association meetings, especially those of a duration more 
than a single luncheon or dinner meeting. 



2. We are continuing to refer to the Department of Justice allegations 
which may constitute a violation of law, as was done in connection with the 
allegations of improper cash payments to military personnel in Europe some 
12 or 13 years ago. We are expanding the information required on the annual 
statements of financial interest and clarifying the extent of information 
required from individuals being considered for appointment in this Depart- 
ment, both at and below the Presidential appointment level. 



Al8 



3. As a result of what we learn as we proceed with our current 
inquiries, we will likely be further amending and clarifying directives, 
regulations and requirements for reporting financial interests. 

In dealing with individual cases under the criteria outlined, we 
will proceed in an orderly manner, with the General Counsel having principal 
reponsibility. Notification to the press, the Congress and the public of 
actions with regard to particular cases will be handled with consideration 
both to the interests of the individuals involved and to our obligations 
to inform the public of the activities of this Department and its personnel. 

With regard to the recently published lists of names involving Rock- 
well International and Raytheon Corporation, my office and the Military 
Services are ascertaining the extent of each named individual's involvement 
in the acceptance of gratuities from defense contractors. As the facts 
are verified, the Services will take such administrative or disciplinary 
action, if any, as is deemed appropriate, based upon the facts of each 
individual case. 

I will require that reports of action taken in each case be forwarded 
to the Office of the Secretary of Defense, and with the assistance of the 
General Counsel, will monitor enforcement by the Services of compliance 
with the Standards of Conduct Directive. 

Our policy is clear, I expect military and civilian personnel of the 
Department, contractors, and others doing business or seeking to do business 
with this Department, to understand Department policy, adhere to it, and 
cooperate in achieving adherence to that policy to the fullest. To do less 
would be a failure to discharge our obligations to the American people. 



END 



Al9 



April 8, 1976 



DEPARTMENT OF DEFENSE ACTIONS ON 
STANDARDS OF CONDUCT - 1974-Present 



1. Unambiguous policy statements were made by senior Defense 
officials on at least two occasions- -March 18, 1974 and November 24, 
1974--at meetings of the Armed Forces Policy Council, the senior 
management meeting of this Department, reiterating the Department of 
Defense policy with regard to the obligations of DoD employees under 
the standards of conduct. 

2. On January 15, 1975, a Memorandum was circulated to the 
Secretaries of the Military Departments, Assistant Secretaries of 
Defense and Directors of Defense Agencies, for communication by them 
to their staffs and subordinate agencies, reminding them that "DoD 
personnel must avoid even the appearance" of any conflict of interest 
and that "these prohibitions are not a matter of degree- -there will be 
absolutely no relationship with Defense contractors which violates, or 
appears to violate the provisions of DoD Directive 5500. 7. " 

3. On October 9, 1975, the Deputy Secretary made an additional 
warning statement on this subject directly to representatives of industry 
at the semiannual meeting of the National Security Industrial Association. 

4. In November 1975, the Office of the Secretary of Defense and 
the Military Services sent 38 letters of admonition to the personnel 
named in the summer of 1975 who used the Northrop hunting facilities. 

5. On November 21, 1975, the Department of Defense Directive 
on Standards of Conduct was amended, to eliminate two exceptions 
which previously had permitted customary exchanges of social amenities 
between friends and relatives and transactions between and among 
relatives which were personal and consistent with the relationship. 

6. In addition, the requirements for filing DD Form 1555, the 
initial, annual and, where appropriate, supplemental, statement of 
financial interests were expanded to include filing by all civilian 
employees at grades GS-16 through GS-18 and above, all general and 
flag officers and all commanders and deputy commanders of major 
installations and activities. 

7. In October 1975, a Tri-Service Committee, composed of the 
Under Secretaries of the Military Departments, was appointed to review 



a20 



the Standards of Conduct Directive for appropriate clarification and 
changes and to examine other possible conflicts of interest arising in 
the Military Services. 

8. An OSD task force was established in the fall of 1975 to 
review audit surveillance and contracting procedures with the goal of 
improving the Department's safeguards against reimbursing contractors 
for improper expenditures. The Report was completed in January 1976 
and included recommendations such as: making consultants' costs 
ineligible for Contractor Weighted Average Share (CWAS) treatment 
calling for some form of certification, either one time or recurring, 
relating to allowable costs; more extensive and frequent rotation of 
contract auditors and administrative contracting officers; certain 
general changes regarding Contractors Weighted Average Share (CWAS) 
usage; and special cost audit reviews at the Washington offices of 
various major contractors. DoD is also participating in a government- 
wide review, initiated by the Office of Management and Budget, to 
study the question of certifications as to entertainment costs. 

9. With regard to Northrop in particular, some $560, 000 of 
improperly charged costs (related to political contributions and not 
entertainment) were recovered. The Air Force is now examining the 
1975 Defense Contract Audit Agency draft report on the special review 
of consultant costs and other matters related to Northrop. Pending 
completion of such on-going audits, final payments were suspended on 
all Northrop contracts, other than firm fixed price contracts, until 
March 31, 1976. Further, Northrop's Contractor Weighted Average 
Share (CWAS) status was suspended indefinitely so that Northrop must 
now demonstrate the reasonableness of all overhead costs charged to 
Government contracts. 

10. A confidential inquiry has been made through the Office of 
the Deputy Secretary to the chief executive or chief operating officers 
of 43 major Defense contractors as to gratuities and entertainment. 
Some of the initial responses have lead to additional inquiries. 

11. The Defense Contract Audit Agency expanded its normal 
audits of the Washington offices of 10 major Defense contractors to 
determine whether reimbursement has been sought for unallowable 
entertainment costs. These contractors include: Raytheon, North 
American Rockwell, Hughes Aircraft, Martin-Marietta, Boeing, 
General Dynamics, Lockheed, Sperry Rand, Grumman and LTV. 



a21 



12. Letters were sent to 106 major Defense contractors request- 
ing their cooperation in explaining to their personnel DoD standards 

of conduct requirements, and asking them not to permit their personnel 
to offer that which the DoD employee is prohibited from receiving. 

13. A letter was sent to 74 major Defense Department project 
managers directing them to establish, or review, programs with their 
staffs as to the importance of standards of conduct compliance. 

14. The Department wrote to 47 industrial/military associations 
advising them of the specific rules required for their meetings to permit 
the continued attendance of Department personnel. 

15. As information is received from any source, the most 
recent information being names of individuals from the Department of 
Defense who have allegedly visited various recreational facilities made 
available by Rockwell International Corporation and Raytheon Corporation, 
the appropriate Department of Defense component will investigate the 
allegations and determine the appropriate action. 



EVT 



a22 




APPENDIX 



August 22, 1966 
NUMBER 7000. 1 



A3D (COMP) 

Department of Defense Directive 

SUBJECT Resource Management Systems of the Department of Defense 

(a) DOD Directive TOJ+O.l, "Program for Improvement In 
Financial Management In the Area of Appropriations 
fox Operation and Maintenance, " May 29, 1959 (hereby 
cancelled) 

(b) DOD Directive 70U1.1. "Cost and Economic Information 
System," July J, I96X (hereby cancelled) 

(c) DOD Directive 5H8.3. . "Assistant Secretary of 
Defense (Comptroller)," January 24, 1966 (8ectlon III. A. 
hereby superseded and cancelled) 



I. PURPOSE 

This Directive establishes the objectives and basic policies 
for the lmprovexant of Dsporteant of Defense resource manage- 
ment system*. 

II. APPLICABIUrr 

The provisions of this Directive apply to all components of 
the Department of Defense. 

in. DEFnrerioNB 

A. Resource Management Systems : 

1. Resource management systems Include all procedures 
for collecting and processing recurring quantitative 
information that (l) relates to resources and (2) is 
for the use of mansgesant. Tliey also include pro- 
cedures which are closely related to quantitative 
systems even though the systems may not themselves 
be primarily quantitative. Resources are men, 
materials (i.e., real and personal property), 
services and money. 



a23 



2. This definition excludes all non-resources (e.g., 
Intelligence, tactical doctrine, military Justice), 
and all non-systems (e.g., one-time collections of 
controlled data, submission of experimental test 
reports, exchange of correspondence). 

3. Resource management systems are ordinarily 
described in terms of the flow and processing 
of information, and the conmon denominator of 
this information is often monetary but the informa- 
tion may be nonmonetary. 

^. Resource management systems include , but are not 
limited to, the following: 

a. Programming and budgeting systems; 

b. Accounting systems; 

c. Other systems for management of resources 
for operating activities; 

d. Systems for management of acquisition and 
disposition of inventory and similar assets; 

e. Systems for management of acquisition, use 
and disposition of capital assets. 

Wor king Capital: Consists of current resources on hand, 
such as cash, "inventories of consumable materiel, other 
current assets less liabilities and contracts and orders 
outstanding, prior to issue of materiel to users or 
services actually rendered. 

Ope rating Budget: An approved operating plan which 
is the basis of "authorization and financial control 
of expenses and selected working capital In the 
execution of a program or programs. 

Operating Activ ities: Each major organizational sub- 
division or entity "made responsible for execution of 
an identifiable segment of a program. 

Financi al Control: The budgetary control or management 
of a unit or function in accordance with an approved 
budget with the view of keeping expenses and changes 
to working capital within the limitations thereof. 



IV. OBJECTIVES 



The objectives of the Department of Defense resource 
ment systems are: 



a24 



7000.1 



A. To provide Managers at all levels, within the 

Department of Defense with Information that will help 
them is sure that resources are obtained and used 
effectively and efficiently in the accomplishment 
of Department of Defense objectives. 

fl. To provide information that is useful in the 
formulation of objectives and plans. 

C. To provide data to support program proposals and 
requests for funds. 

D. To provide a means of assuring that statutes, agree- 
ments with Congressional conrnittees, and other require- 
ments emanating from outside the Department of Defense 
relating to resources, are compliid with. 



V. POLICIES 



A. Department of Defense approved p?.ans will be stated in 
the Five Year Defense Program. This program will be the 
nucleus of Department of Defense resource management 
systems: and planning, programming, budgeting, account- 
ing and reporting for the Department of Defense will 

be consistent with it. 

B. Programming and budgeting systems will: 

1. Be correlated as fully as possible with each other 
and with management accounting systems, using common 
data elements and definitions, translatable struc- 
tures and non-duplicative procedures and schedules. 

2. Be organized so as to focus on the goals, purposes 
and outputs of the Department of Defense, and on 
the costs of achieving these goals. 

C. Systems for management of resources of operating 
activities will: 

1. Focus on outputs and on resources used, i.e., 
expenses. 

2. Focua on managers who are responsible for effective 
and efficient utilization of resources. 

3. Focus on actual performance in relation to planned 
performance. 

U. Use operating budgets and accountiiig a-: a primary 
aid in management control at each org.'uiizational 
level. 



a25 



5. use working capital to bold resources in suspense 
in both time and place between the acquisition of 
resources and their consumption. 

D. Systems for management of inventory and similar assets 
will: 

1/ Haasure available Inventory in readiness terms, 
against approved requirements. 

2. Maximize the oapability to use comnon stores of 
inventory for all DoD purposes and consumers. 

E. Systems for management of capital acquisitions will: 

1. Focus on the item (or component thereof) being 
acquired, its quality, its time schedule, and its 
cost, in terms of both plans and actuals. 

2. Include special information subsystems applicable 
to acquisitions of selected major capital items. 

3. Be standardized and controlled, to the extent 
practicable, so as to minimize the data gathering 
and reporting workload imposed on contractors and 
in-house activities. 

h. Be structured so as to minimize changes required to 
accounting systems used by contractors. 

F. Resource management systems will be oriented to the 
needs of management, but they also must provide 
information required by the Congress, Bureau of the 
Budget, Treasury Department, and by other Government 
agencies. Where the information required by these 
outside agencies is not the same as that used for re- 
source management, translation from one type to the 
other will be accomplished at the headquarters level 
of each military department and Defense agency. 

G. Systems will be designed to provide data to meet the 
need at each management level. As a general policy, 
data at each management level will consist of summaries 
of data used at lower levels. 

H. Resource management systems will be designed to assure 
compliance with limitations, prohibitions and other 



a26 



Aug 22, 6£ 
7000. 1 



requirements or understanding* which are or may be 
established by lav, direction or agreement within the 
Executive Branch of the Government or vith the Congress. 

I. Each system or subsystem will be compatible vith other 
systems; It should not overlap or duplicate other 
systems; all the data should meet a recognized need; 
the value of the information obtained must exceed the 
cost of collecting it; standard terms and data elements 
should be used to the extent feasible. 

VI. RB3P0WSIBILITIES 

A. Subject to the direction, authority, and control of the 
Secretary of Defense, the Assistant Secretary of Defense 
(Comptroller) has the responsibility to provide for the 
design and Installation of resource management systems 
throughout the Department of Defense. 

B. This responsibility requires that the Assistant Secretary 
of Defense (Comptroller): 

1. Maintain an overview of all DoD resource management 
systems activity, including an inventory of all 
significant DoD resource management systems, that 
are either in use or under development. 

2. Rev lev and approve proposed significant changes in 
resource management systems or proposed nev systems. 

3. Insure compatibility and uniformity among resource 
management systems. 

k. Provide policy guidance for the characteristics of 
and general criteria governing resource management 
systems. 

5. Insure standardization of data elements and data 
codes. 

6. Under certain circumstances, as described belov, 
develop nev systems or improvements in existing 
systems. 

C. In discharging this responeibilltv, the Assistant 
Secretary of Defense (Comptroller) will take the lead 
in developing certain types of resource management 
systems. Primarily, these are systems that are 
principally financial information. With respect to 



a27 



other resource management systems, the office 
primarily responsible for the function that a 
system is to serve will normally take the lead 
In development. In the latter case, the Comptroller 
vlll assist to the extent feasible, and has responsi- 
bility only for assuring that the final product meets 
the criteria for an acceptable system, as specified 
In Section V. 

The Comptroller vlll not take the lead in resource 
management systems that do not primarily Involve 
financial Information unless he is requested to do 
so by the responsible office. 

D. The Oonpt roller should be advised of plans for a nev 
system or a system change from the outset, so that 
proposals that are unlikely to meet these criteria 
can be called to the attention of the lead office 

at the earliest possible time. 

E. Although the Assistant Secretary of Defense (Comptroller) 
has a similar responsibility for resource management 
systems developed vithin Military Departments or Defense 
Agencies, he normally will exercise this responsibility 
only by examining and approving proposed systems and 
significant system changes. Be vlll look to his 
counterparts in the Military Departments or Defense 
Agencies to exercise responsibility vithin their organi- 
zations corresponding to that described above. 

F. The Conpt roller does not normally use the information 
provided by a system, unless it relates to the Oonpt roller 
function. His primary responsibility is to provide for 
the developBoot of systems that vill help managers do 
their Jobs. 

VII. CANCKLIATION 

References (a), (b), and Section HI .A. of (c) are hereby 
cancelled. 

VIII. KKKKUTIVB DATE 

This Directive is effective on publication. 



CJ 



Deputy Secretary of Defense 



a28 



APPENDIX 




NUMBER 5000. 2 

DAJE January 21, 1975 



SUBJECT 



Reference: 



I. 



DDR&E 

Department of Defense Instruction 

The Decision Coordinating Paper (DCP) ?nd the Defense 
Systems Acquisition Peview Council (DSARC) 

(a) DoD Directive 5000.1, "Acquisition of Major Defense 

Systems," July 13, 1971 

(b) DoD Directive 5000.26, "Defense Systems Acquisition 

Review Council (DSARC), " January 21, 1975 

(c) DoD Directive 5000.3, "Test and Evaluation," January 19, 

1973 

(d) DoD Directive 5000.4, "0SD Cost Analysis Improvement 

Group," June 13, 1973 

(e) DoD Instruction 7045.7, "The Planning Programming and 

Budgeting System," October 29,1969 

(f) DoD Directive 7250.5, "Reprograrmiing of Appropriated 

Funds," January 14, 1975 

(g) DoD Directive 6050.1, "Environmental Considerations in 

DoD Actions," March 19, 1974 
(h) DoD Instruction 7000.3, "Selected Acquisition Reports 

(SAR)," September 13, 1971 
(i) DoD 7110-1 -M, "DoD Budget Guidance Manual," July 1, 1971 
authorized by DoD Instruction 7110-.1, August 23, 1968 



PURPOSE 



This Instruction establishes policy and instruction guidelines 
governing the use of the Decision Coordinating Paper (DCP), formerly 
referred to as the Development Concept Paper, and the Defense Systems 
Acquisition Review Council (DSARC) in the decision-making process at 
the Secretary or Deputy Secretary of Defense level on major defense 
system acquisition programs. 

II. APPLICABILITY AND SCOPE 

The provisions of this Instruction apply to the Office of the 
Secretary of Defense, the Military Departments, the Organization of 
the Joint Chiefs of Staff, and the Defense Aqencies (hereinafter 
referred to collectively as "DoD Components") and encompass major 
defense system acquisition policies and programs (DoD Directive 
5000.1, reference (a)). 

III. GENERAL 



The DCP/DSARC process involves decision-making at the Secretary of 
Defense level on major defense system acquisition programs and re- 
lated policies. The DCP documents the current or proposed program 
and serves as the basis for DSARC reviews. The DSARC, as an 



a29 



$000.2 (Encl 1) 
Jan 21, 75 # 



program alternative, the required changes to previously allo- 
cated DoD Component resources and any changes to previous 
estimates for the program. 

G. Each DCP for a program going to DSARC I and II shall contain 
a Technology Assessment Annex (TAA) that will identify any 
areas of technological risk remaining in the program and 
describe plans for addressing these risks. The TAA 9halll 
be prepared by the Program Manager, assisted by a laboratory 
or laboratories selected for this specific purpose. The TAA 
shall not exceed one page in length. The identity of the 
assisting laboratory shall be included in the TAA. 

H. The DCP will remain in existence throughout the complete 
acquisition phase of a program. The DCP shall be reviewed 
annually and updated as appropriate (see subsection III.E.). 

I. Cost escalation shall be handled in the DCP in the same manner 
as in the Selected Acquisition Report (SAR), prescribed by 
DoD Instruction 7000.3 (reference (h)). 

DCP OBJECTIVES 

A. The basic objectives of each DCP, regardless of which 
Secretary of Defense decision it supports, are to: 

1. Ensure collaboration and essential debate by DSARC 
Principals, and other key officials as appropriate, before 
Secretary of Defense decisions. 

2. Relate the phasing of the development and acquisition 
program to force modernization needs in the appropriate 
mission area, utilizing information on projected budgetary 
constraints when possible. 

3. Identify major issues or differences of opinion that 
bear on the immediate Secretary of Defense decision. 

4. Identify and evaluate feasible program alternatives based 
on their acquisition and ownership costs and projected 
performance against the established need. Evaluations 
shall include consideration of new development, improving 
existing systems, and foreign developments. 

5. Show how the program relates to similar programs in other 
Military Services and ensure no unnecessary duplication. 

6. Identify and present a plan for the resolution of those 
issues and risks that are anticipated during the next 
program phase. 

7. Establish the plan, including test and evaluation effort, 
for the next program phase (DoD Directive 5000.3, 
reference (c)). Develop a fall-back plan for an alter- 
native program if objectives are not achieved. 

8. Define considerat i ens of interoperability with other 
force elements. This sh'fii include a statement of the 
plar. 'o address such factors as electromagnetic compati- 
bility np-Z i .lent if ication n?.:-.^ when applicable. 



rFirzz saendnert ;£v f f/z2 ''.■£} 



a30 



5000. 2 (Encl 1) 
Jan 21, 75 

9. Summarize the technical readiness of subsystems and the degree 
of standardization including test and support equipment. 

10. Establish cost, performance and schedule thresholds for the 
total program and the next program phase, including funding 
limits for maintaining alternatives. Address the estimated 
probability of producing and supporting the adequate number of 
systems within realistic resource and time limitations. 

11. Describe management responsibility, structure and planned 
management systems. 

12. Establish objectives and limits of authority that are delegated 
to the cognizant DoD Component(s) for conducting the next phase 
of the program. 

13. Assure that the acquisition strategy and related contract 
plan are consistent with program characteristics, including 
risk. Assure that economic and technical competition to the 
maximum extent feasible is planned. 

14. Identify the environmental considerations as required by DoD 
Directive 6050.1 (reference (g)). 

15. Identify impact of the proposed system program on the utili- 
zation or expansion of DoD facilities. 

16. Ensure consideration of such international aspects as buying 
foreign systems, joint development programs, and sales to 
allied countries. 

17. Identify the elements of the program that require protection 
by security classification. 

18. Identify any documents(s) that develop the analytical rationale 
for force-level projections or goals. 

B. Normally, the DCP I, which supports the decision by the Secretary 
of Defense to enter the Program Validation Phase, will accommodate 
the basic objectives above and place added emphasis on the follow- 
ing areas: 

1. Identify threat factors as analyzed in appropriate documents. 

2. Describe and substantiate the operational need. 

3. Identify broad performance objectives; substantiate that these 
performance objectives meet the operational need. 

4. Identify the critical questions and areas of risk to be resolved 
by test and evaluation and provide a summary statement of test 
objectives, schedules, and milestones. 



a31 



5000. 2 (Encl 1) 
Jan 21, 75 

5. Identify preliminary cost and schedule estimates, and identify 
design-to-cost goals or indicate when these will be established, 

6. Identify critical logistics support factors that must be con- 
sidered during the acquisition. 

7. Identify issues which must be resolved prior to DSARC II and 
ensure that the program is adequate to resolve them. 

C. normally, DCP II, which supports the decision by the Secretary of 
Defense to enter the Full -Scale Engineering Development Phase, will 
accommodate the basic objectives above and place added emphasis on 
the following areas: 

1. Confirm the operational need, considering changes in policy or 
threat since the initial Secretary of Defense decision. 

2. Establish and substantiate the specific performance objectives 
including the reliability and maintainability requirements. 

3. Present results of test and evaluation accomplished to date, an 
updated statement of critical questions and areas of risk still 
needing resolution by test, and a detailed statement of test 
plans and milestones (DoD Directive 5000.3, reference (c)). 

4. Present results of cost, performance, and schedule trade-off 
analyses, and cost effectiveness studies as required. 

5. Present the design-to-cost goals and rationale. 

6. Identify and evaluate the logistic support alternatives in- 
cluding their impact on design. 

7. Identify issues which must be resolved prior to DSARC III and 
ensure that the program is adequate to resolve them. 

D. normally, DCP III, which supports the decision by the Secretary of 
Defense to enter the Production/Deployment Phase will accommodate 
the basic objectives above and place added emphasis on the 
following areas: 

1. Confirm the operational need, considering changes in policy or 
threat since the previous Secretary of Defense decision. 

2. Evaluate the degree of achievement of performance objectives 
including reliability and maintainability. 

3. Provide an assessment of system productbil ity, operational 
suitability, and logistic supportabil ity. 



77-936 O - 76 - 12 



a32 



5000. 2 (Encl 1) 
Jan 21. 75 



4. Present (a) an assessment of the development and opera- 
tional test and evaluation results and the readiness of 
the system to enter production, and (b) the scope and 
schedule for any test and evaluation still to be accom- 
plished. (DoD Directive 5000.3, reference (c).) 

5. Present results of cost, performance, and schedule 
trade-off analyses and cost effectiveness analyses as 
required. (These analyses shall relate to acquisition, 
operating and support costs). 

6. Describe the procurement plan, including any options and 
how it relates to the proposed contract. 

7. Validate that technical risks have been eliminated or 
are in hand. 

8. Present the integrated logistic support plan and produc- 
tion plan. 

E. normally, for ship programs, DCP I, II and III will be 
developed when preparing to start Preliminary Design, 
Contract Design and Detailed Design (for the first procure- 
ment-funded ship) respectively. The DCP III will be up- 
dated for the fol low-ship procurement DSARC review. 

III. RESPONSIBILITIES 

A. Preparation and coordination of the DCP shall be accomplished 
as follows: 

1. The Head of the DoD Component concerned shall be respon- 
sible for the completeness and adequacy of the DCP. 

2. The cognizant DoD Component shall prepare the "initial 
draft" of each DCP, based upon an OSD-approved outline, 
and forward it to the responsible DSARC Chairman's staff 
office (ODDR&E, OASD(IAL), OASD(I) or ODTACCS) for review 
and coordination with all interested OSD offices. 

3. The responsible OSD staff shall prepare and distribute 
an acceptable "for comment" draft to the interested 
offices, including that of the cognizant DoD Component, 
who will return their comments within 15 working days. 

4. Upon receipt, the DSARC Chairman's staff office will 
accoimodate the comments in a "for coordination" draft, 
which must be available for review by the DSARC princi- 
pals and the Head of the cognizant DoD Component at 
least 10 working days prior to the DSARC review. 



a33 



5000. 2 (Encl 1) 
Jan 21, 75 

5. Although the signatories on a DCP may vary from program to 
program, the coordination shall always include the DSARC 
principals; the Chairman of the Joint Chiefs of Staff, or his 
designee; the Deputy DDR&E (Test and Evaluation); and the 
Head of the cognizant DoD Component. 

6. Final DCP coordination shall be accomplished on the "for coord- 
ination" draft. Signature by the Secretary of Defense shall 
consummate the decision and approve the DCP. 

B. The offices mentioned in subsection III. A. are responsible for 
providing an appropriate representation of the concerns of their 
functional area to the DSARC Chairman's staff office responsible 
for the DCP coordination. The OSD staff office responsible for the 
DCP will ensure that participants' comments are considered and 
decision alternatives and unresol ved issues are clearly represented 
in the DCP. 

C. Responsibility for distributing the DCP following a Secretary of 
Defense decision, or for revising the DCP to reflect the Secretary 
of Defense decision set forth in a decision memorandum, rests with 
the appropriate DSARC Chairman's staff office. These actions shall 
be completed within 30 working days after a Secretary of Defense 
decision is made. 

D. Responsibility for notifying the Secretary of Defense and the DSARC 
Chairman when a program threshold established in the DCP has been 
breached, or is forecast to be breached, rests with the Head of 
the cognizant DoD Component. 

E. Responsibility for annual review of each DCP rests with the Head of 
the cognizant DoD Component. This review will normally be held 
after the January FYDP updating. 

1. The Component Head shall forward the results of the review and 
any proposed revision to the appropriate DSARC chairman for 
coordination with the DSARC Principals and the Deputy DDR&E 
(T&E), and other appropriate signatories (see subection III. A.) 
The DCP revision shall be completed within 90 days, when 
necessary, in the simplest and most expeditious manner (by 
Cover Sheet, if feasible). 

2. In particular, the resource annex to the DCP shall be reviewed 
and revised as necessary to assure consistency with the 
previous year's actual funding, current year's anticipated 
funding, budget year funding per the President's budget, and 
out-year funding per the FYDP. If only the resource annex to 
the DCP is being changed, the revised resource annex may be 
attached to the DCP Cover Sheet indicating that no other change 
was made to the DCP . 



a34 



5000, 2 (End 1) 
Jan 21, 75 



3. Even when no changes are deemed necessary following the annual 
review, a Cover Sheet shall be appended to the DCP, indicating 
the review has been accomplished; this Cover Sheet shall be 
distributed to the DSARC principals and others as appropriate. 

F. Responsibility for obtaining reprogramming approval, following a 
Secretary of Defense decision, rests with the Head of the cogni- 
zant DoD Component (DoD Directive 7250.5, reference (f)). 



a35 



CORRECTED PAGE 

5000. 2 
Jan 21, 75 



V. WAIVERS 

Specific program circumstances may dictate the need for DoD 
Components to deviate from the procedures outlined herein. When 
appropriate, the Head of the cognizant DoD Component may request 
a waiver to particular requirements of this document from the 
appropriate DSARC Chairman, indicating the circumstances that 
justify such waiver. 

VI. EFFECTIVE DATE AND IMPLEMENTATION 



This Instruction is effective irmiediately. The DoD Components 
which have authority and responsibilities under DoD Directive 
5000.1 (reference (a)) shall transmit this Instruction to all 
organizations and personnel involved in major defense system 
acquisition programs. No implementing policy documents are 
necessary. 



Malcom R. Currie 
Director Defense Research 
and Engineering 



Enclosure - 1 
The Decision Coordinating Paper (DCP) 

OTHER DSARC MEMBERS APPROVING THIS INSTRUCTION: 



Terence E. McCl a ry 
ASD(Comptroller) 

Arthur I. Mendolia 
ASD(I&L) 



Albert C. Hall • 



(jUs-*^ 




/. 



Leonchod- SuvfTv 
ASD(PA&E) 

V^-c>-^Artf.k 

Thomas C. Reed 
DTACCS 



C*>£* £L 



a36 



5000. 2 (Encl 1) 
Jan 21. 75 



THE DECISION COORDINATING PAPER (DCP)* 
{Guidelines For Preparation And Processing 



I . GENERAL 



A. The DCP is a summary document of not more than 20 standard 
pages that provides management with the essential information 
on a major defense system program (DoD Directive 5000.1, 
reference (a)). There will be a DCP for each major defense 
system program. The DCP will also be used to accommodate pro- 
grams which represent major modifications to existing deployed 
systems. 

B. The form and content of each DCP issued sha"l focus on the 
particular phase of the program it is intended to support, 
related issues, and the specific decision it seeks. 

C. The "initial" draft DCP is a Military Service prepared draft 
which after preliminary review within the OSD becomes a "for 
comment" draft. This "for comment" draft is forwarded to all 
interested groups for review and comments. When revised to 
reflect these conments it becomes the "for coordination" 
draft which is used (1) as the basis for DSARC review, (2) 
for final coordination, and (3) signature by the DSARC 
Principals; the Deputy DDR&E (T&E); and other appropriate sig- 
natories; and the Secretary of Defense (see subsection III. A). 
The "for coordination" draft will be modified, if necessary to 
reflect the Secretary of Defense decision prior to signature. 

D. During the DCP coordination, key issues and the substance of 
disagreements shall be clearly defined. While the coordina- 
tion process will resolve many major issues, it may not be 
possible to resolve all issues. However, it is required 
that the unresolved issues be clearly identified in the DCP. 
Conflicting viewpoints shall be documented, supported and 
highlighted in the DCP. 

E. Each DCP will identify any approved Area Coordinating Paper 
(ACP), or Mission Concept Paper (MCP) encompassing the specific 
mission area to which it relates. 

F. Each DCP shall contain a Resource Annex. For each program 
alternative in the DCP, this annex shall specify Cost Data, 
Production Data, and Inventory/Objectives Data using the same 
format as that employed in the submission of Congressional 
Data Sheets, as described in the Budget Guidance manual, DoD 
7110-1 -M (reference (i)). The Annex will indicate, for each 



*Fonnerly referred to as "Development Concept Paper." 



a37 



advisory body, makes recommendations to the Secretary of Defense 
which are considered in the formulation of his decisions. The 
success of the DCP/DSARC process is vitally dependent upon a clear 
recognition of the individuality of each major defense system 
program and the sensible application of the policies of DoD 
Directive 5000.1 (reference (a)) and those of this Instruction. 

IV. POLICY 

A. The DCP and the DSARC shall be used in support of the Secretary 
of Defense decision-making process in accordance with DoD 
Directive 5000.1 (reference (a)). 

1 . The Defense System Acquisition Review Council (DSARC) 

a. The DSARC serves as an advisory body to the Secretary 
of Defense on major defense system acquisition programs 
and related policies. The DSARC provides information 
and recommendations to the Secretary of Defense when 
decisions are necessary on system acquisitions, and 
related policies. 

b. The mission, composition and operation of the DSARC 
and the responsibilities of its members and support- 
ing organizations are set forth in its charter (DoD 
Directive 5000.26, reference (b)). 

2. The Decision Coordinating Paper (XP) 

a. The purpose of the DCP is to support the DSARC review 
and the Secretary of Defense decision-making process 
throughout the acquisition phase of the system program. 
It is the principal document for recording: (1) the 
essential information on a program; e.g., need/threat, 
concept, milestones, thresholds, issues and risks, 
alternatives, management plan, supporting rationale 
for the decisions, and affordabil ity in terms of 
projected budget and phasing of out-year funding; and 
(2) the Secretary of Defense decisions. 

b. A Secretary of Defense decision is consummated when he 
signs the DCP, or issues a memorandum, authorizing 
the DoD Component to proceed with the program 
described in the DCP or directing another course of 
action. The Secretary of Defense decision set forth in 
the DCP establishes the limits of authority deleqated 
to the cognizant DoD Component in the conduct of the 
program. 

c. The DCP shall not be considered a vehicle for force- 
level decisions, even though it may contain 






a38 



5000. 2 
Jan 21, 75 

force-level information. When such information is present 
in the DCP, the information shall ; "be consistent with cur- 
rent force-level documents (e.g., the Five Year Defense 
Program (FYDP)), or specific differences noted. 

d. Programs which represent major modifications to existing 
deployed systems will be treated as separate programs and 
accommodated by the DCP 1n the same manner as major system 
programs. 

e. The guidelines governing the objectives of DCPs and the 
responsibilities associated with their preparation, coordi- 
nation and review are set forth in enclosure 1. 

B. Scheduled Program Decision Points 

1. Approval (or disapproval) to conduct a phase of a major defense 
system program will be given by the Secretary of Defense. The 
decision points shall be scheduled to meet the peculiar needs 
of each program. Each decision point shall be supported by a 
"for coordination" draft of a DCP and a recommendation by the 
DSARC. The number, timing, and nature of the decision points 
shall be established by the Military Services and the Office 
of the Secretary of Defense (OSD) jointly and, though not the 
same for all programs, they will normally include: 

a. The Program Initiation Decision Point . At this decision 
point Secretary of Defense considers approval (or dis- 
approval) to commit resources for advanced development 
during the Validation Phase of a major defense system that 
1s projected for Inclusion in the force structure. Early 
scheduling of the program Initiation decision point 1s 
essential to timely Secretary of Defense review. Primary 
concerns at this decision point are: 

(1) The identified need has been substantiated; 

(2) The proposed range of system major performance para- 
meters matches the need; 

(3) In the plan for evaluating system alternatives, con- 
sideration has been given to all approaches that 
appear to be technologically feasible, operationally 
practicable and economically affordable (i.e., 
includes modifying existing defense systems, using 
system (or variants) under development by other DoD 
components, developing a new system, or employing a 
foreign developed system); 

(4) Preliminary costs (DoD Directive 5000.4, reference 
(d)) and schedule estimates arc- realistic and accept- 
able; 



a39 



(5) Plans and schedules for test and evaluation required before 
start of full-scale engineering development are adequate (DoD 
Directive 5000.3, reference (c)); 

(6) The relative estimates of costs to maintain and operate the 
various alternative systems have been addressed and evaluated; 
and, 

(7) The acquisition strategy is consistent with program character- 
istics, including risk and allowable costs, fiscal year 
phasing and constraints resulting from projected total budget. 

In general, the program initiation decision point should occur be- 
fore any major obligation of development funds on the program and 
before any feasible program alternatives have been foreclosed. 

The Full-Scale Engineering Development Decision Point . At this 
decision point, the Secretary of Defense considers approval (or 
disapproval) to commit resources to the full-scale enqineerinn 
development or to the detailed design of a major defense system. 
Primary concerns at this decision point are: 

(1 ) Reaffirming the operational need for the system in the light 
of its estimated acquisition and operating cost and projected 
budgetary constraints; 

(2) The adequacy of the evaluation of alternative approaches; 

(3) The readiness of the system to enter full-scale enqineering 
development; 

(4) The adequacy of the test and evaluation approach and test 
insults to date (DoD Directive 5000.3, reference (c)), and 
availability of an integrated test and evaluation plan; 

(5) Assurance that cost estimates are both realistic and accept- 
able within foreseen budgetary constraints (DoD Directive 
5000.4, reference (d)) and schedule estimates remain real- 
istic and acceptable; and, 

(6) The acquisition strategy and contractual plan are consistent 
with program characteristics, and risks. 

The Production/Deployment Decision Point . At this decision point, 
Secretary of Defense considers approval (or disapproval) to corTmit 
substantial resources to the production of a major defense system. 
Primary concerns at this decision point are: 

(1) Reaffirming the operational need for the system in the light 
of its estimated acquisition and operating cost and projected 
budgetary constraints; 



a40 



3000. 2 
Jan 21. 75 



(2) Ensuring the proposed quantity is consistent with the 
operational needs and the available projected 
resources; 

(3) The readiness of the system to enter the production 
process, as demonstrated by the results of tests con- 
ducted 1n accordance with the policy in DoD Directive 
5000.3 (reference (c); 

(4) The readiness of the production process to build the 
system; 

(5) Assurance that the system can be acquired, maintained 
and operated at reasonable cost; 

(6) Assurance that cost estimates are both realistic and 
acceptable within foreseen budgetary constraints (DoD 
Directive 5000.4, reference (d)); and, 

(7) Reassuring that the acquisition strateay and contrac- 
ual plan are economically efficient and consistent 
with program characteristics, and risk. 

d. Additional Decision Points . In addition to the three major 
decision points, the program situation may require 
additional decision points (e.g., release of funds for long 
lead material or effort, pilot production, additional 
systems for test and evaluation, successive production lot 
procurements). 

e. Ship Programs . For ship proqrams the Program Initiation 
Decl slon Point equates to start of Preliminary Desiqn and 
the Full-Scale Engineering Development Decision Point 
equates to the start of Contract Design. While the Pro- 
duction/Deployment Decision Point relates to the start of 
Detailed Design (for the first procurement-funded ship), 
the decision point authorizing follow-ship procurement 
will occur later after satisfactory progress of test and 
evaluation related to the ship class (DoD Directive 
5000.3, reference (c)). 

C. Unscheduled Program Decisions . Events both internal and external 
to the program (such as a congressional fund action. Secretary of 
Defense decision on a Program/Budget Decision, or a change in threat 
or national strategy), unforeseen technical difficulty or other 
circumstances--which preclude achievement of a program objective or 
otherwise causes a breach, or a likely breach, of established cost, 
performance, or schedule DCP threshol ds--may require a DSARC review 
in addition to those normally scheduled. Such reviews would lead 
to unscheduled program decisions. (See subsection II I. D, 
enclosure 1. ) 

0. Relationships 

1 . The DCP/DSARC Process and the Planning, Programmin g and 
budgeting System (PPBS) 

a. Major program decisions are to be made in context with both 
the PPBS (see DoD Instruction 7045.7, reference (e)) and 
the DCP/DSARC process. 

b. In the PPDS, the Secretary of Defense decision-making on 
Individual defense system programs is keyed to the problem 



a41 



of balancing all programs within the established DoD 
fiscal limits. The program covered by a DCP must fit 
into this affordability framework. 

c. The DCP/DSARC process complements the PPBS by addres- 
sing issues related to the proqress of individual 
defense system programs and ensures adequate Secretary 
of Defense reviews related mainly to the individual 
program milestones, rather than to the PPBS schedule. 

d. Secretary of Defense decisions made through the DCP/ 
DSARC process must be reflected in the FYDP. This 
shall be accomplished either (1) durinq the Program 
Objective Memorandum (P0f1) Issue Paper/Program Decision 
Memorandum (PDM) process, or (2) during the Program/ 
Budget Decision (PBD) process, depending on when the 
DCP/DSARC -related decision is made. 

e. In cases where a POM or budget submittal to OSD 
deviates significantly from a previously approved 
DCP/DSARC -related decision, this fact and the cost, 
schedule and performance impact on the program shall 
be noted in the POM or budget submittal and explained. 

f . When an OSD-generated PPBS document, such as tr.2 
Issue Paper or PBD, offers an alternative to the DCP/ 
DSARC-related decision, the document shall be sub- 
mitted to the cognizant DSARC chairman and other 
interested DSARC principals, or their designees, for 
coordination or comment and recommendation, as 
jppropriate. Each DCP affected by an approved 
decision document shall be updated or amended within 
30 working days to reflect that change and to refer- 
ence the appropriate decision document. 

2. The DCP/DSARC Process and the Program Memorandum (PM) . The 
PM is essentially the same as the DCP but is used for pro- 
grams which though important may not fully meet the criteria 
of DoD Directive 5000.1 (reference (a)) as a major program 
warranting a DCP. The use of a PM to support program re- 
views and decision making shall be the same as the DCP 
except that (a) signature for approval shall be that of the 
appropriate Chairman of DSARC or at his discretion for- 
warded to the Secretary of Defense for signature, (b) the 
use of the DSARC to review the program shall be at the 
discretion of the DSARC Chairman, and (c)coordination on 
a PM may require that of the DSARC Chairman, Head of the 
DoD Component concerned, and only others having direct 
interest. 




a42 



APPENDIX 10 January 21, 1975 

NUMBER 5000. 26 

DDR&E 

Department of Defense Directive 



SUBJECT Defense Systems Acquisition Review Council (DSARC) 

References: (a) DoD Directive 5000.1, "Acquisition of Major 
Defense Systems," July 13, 1971 

(b) DoD Instruction 5000.2, "The Decision 

Coordinating Paper (DCP) and the Defense 
Systems Acquisition Review Council 
(DSARC)," January 21, 1975 

(c) DoD Directive 5000.3, "Test and Evaluation," 

January 19, 1973 

(d) DoD Directive 5000.4, "0S0 Cost Analysis 

Improvement Group," June 13, 1973 

(e) Deputy Secretary of Defense Multiaddressee 

Memorandum "Establishment of Defense 
Systems Acquisition Review Council," 
May 30, 1969 (hereby cancelled) 

I. PURPOSE 

This Directive provides a permanent charter for the 
Defense Systems Acquisition Review Council (DSARC) 
originally established in reference (e). 

II. CANCELLATION 



Reference (e) is hereby superseded and cancelled. 

III. APPLICA BILITY 

The provisions of this Directive apply to the Office 
Secretary of Defense, the Military Departments, the 
Organization of the Joint Chiefs of Staff, and 
Defense Agencies (herein after referred to collectively 
as "DoD Components") having responsibilities related to 
the acquisition of major defense systems. 



a43 



IV. FUNCTION 



A. The function of the DSARC is to serve as an advisory body to 
the Secretary of Defense on the acquisition of major defense 
system programs and related policies, and to provide him with 
supporting information and recommendations when decisions 
are necessary. 

B. The DSARC will serve to complement the Decision Coordinating 
Paper (DCP), formerly known as the Development Concept Paper, 
which continues as a formal DoD management and decision- 
making system for the acquisition of major systems (DoD 
Directive 5000.1 and DoD Instruction 5000.2, references 

(a) and (b)). 

C. Reviews by the DSARC are intended to provide open discussion 
of issues and alternatives by DoD officials, based upon the 
most complete information available, to ensure that the 
advice given to the Secretary of Defense is as complete and 
as objective as possible. 

COMPOSITION 



A. The DSARC principals shall be the Director of Defense 
Research and Engineering, Assistant Secretary of Defense 
(Installations and Logistics), Assistant Secretary of Defense 
(Comptroller), Assistant Secretary of Defense (Program 
Analysis and Evaluation) and, for programs within their areas 
of responsibility, the Assistant Secretary of Defense 
(Intelligence) and Director Telecommunications and Command 
and Control Systems. Other Assistant Secretaries of Defense 
having interest in specific programs (e.g., Assistant 
Secretary of Defense (International Security Affairs), 
Assistant Secretary of Defense (Public Affairs), Assistant 
Secretary of Defense (Manpower and Reserve Affairs), or 

the General Counsel may be invited to serve as principals, 
when appropriate. 

B. The Deputy Director of Defense Research and Engineering 
(Test and Evaluation) will participate in the DSARC reviews 
and process; he will report to the DSARC and to the Secretary 
of Defense his evaluation of the program test plans and test 
results (DoD Directive 5000.3, reference (c)) as to their 
adequacy to support the decision under consideration. 

C. The Chairman of the Cost Analysis Improvement Group (CAIG) 
will serve as an advisor to the DSARC reporting the CAIG 
evaluation of the Military Service cost estimates of the 
program (DoD Directive 5000.4, reference (d)) at each decision 
point. 



a44 



Jan 21, 75 
5000.26 

D. The Head of the cognizant DoD Component and the Chairman of 
the Joint Chiefs of Staff, or their representatives, will 
participate in the DSARC reviews. The JCS representative 
will serve as an advisor to the DSARC and provide to the 
DSARC a statement of the JCS position relating to the system 
program. 

E. Other key officials may be invited to participate in the 
meetings, or to serve as advisors, by the DSARC Chairman on 
a case-by-case basis. 

F. An Executive Secretary shall be appointed by the Chairman. 

G. The DSARC shall be chaired by: 

1. The DDR&E for the program initiation and full -scale 

engineering development decisions and for all special 
reviews when system development is the primary issue. 

2. The ASD(ISL) for production decisions and for all special 

reviews when system production, procurement, maintenance 
or logistic support is the primary issue. 

3. The ASD(I) or the DTACCS will serve as co-chairman with 

DDR&E or ASD(ISL), as appropriate, for programs of their 
primary responsibility. 



VI. OPERATION 



A. Reviews may be requested by any of the DSARC Principals or 

by the Head of the cognizant DoD Component. The DSARC Chair- 
man will provide official notice of all meetings. 

B. An informal pre-DSARC staff planning meeting may be initiated 
and chaired by the DSARC Chairman's cognizant staff assistant. 
This meeting will be attended by the appropriate staff 
members from the offices of the DSARC principals and the 
Deputy DDR&E(T&E), the CAIG Chairman, representative(s) from 
the cognizant DoD Component, and the DSARC Executive 
Secretary. The meeting should be held approximately 60 
working days prior to the scheduled DSARC meeting depending 

on the complexity of the issues to be discussed at the DSARC 
review. The purpose of the meeting shall be to discuss (1) 
the specific issues and alternatives to be treated at the 
DSARC review; (2) the information that will be made available 
to support the DSARC deliberations; (3) the readiness of the 
program for DSARC review; and (4) the schedule of DSARC 
related events leading to the DSARC review. 

C. A scheduled DSARC review shall precede the recommendation by 
the DSARC Principals to the Secretary of Defense to proceed 
with the Program Initiation (Validation Phase), the 



a45 



Full-scale Engineering Development Phase and the Production/Deploy- 
ment Phase of a major Defense system program. The following are 
guidelines for the conduct of these DSARC reviews. 

1 . T he DSARC I Revi ew (Program Initiation) 

a. At the DSARC I review leading to the program initiation deci- 
sion, the following will be determined: 

(1) A potential military need exists for a new Defense system 
or an improved system. 

(2) The military requirements properly relate to the mission, 
the threat, and force obsolescence. 

(3) Alternative Defense systems that will satisfy the military 
need including system modernizations and foreign devel- 
opments have been considered along with anticipated re- 
sources for resolving the need. 

(4) Broad mission/performance requirements /specifications 
are adequately defined (technically) and are economically 
plausible. 

(5) Anticipated quantity, resource and schedule estimates 
are realistic and acceptable in context with affordability 
limits. The appropriate acquisition (e.g., planning esti- 
mates) and ownership cost estimates have been validated 
by independent assessment (DoD Directive 5000.4, 
reference (d)). 

(6) Major problems, issues, and risks are identified and 
suitable methods for their resolution, such as the use of 
prototypes, are planned. 

(7) The statements of questions and issues and of test objec- 
tives and schedules are adequate (DoD Directive 5000.3, 
reference (c)). 

(8) Critical logistic support factors and facilities impact have 
been identified. 

(9) Future support costs including a comparison with those of 
current systems, have been considered. 

(10) The use of currently available subsystems versus devel- 
opment of new subsystems, has been or will be considered. 

(11) Economic and technical competition to the maximum 
extent feasible is planned. 



a46 



Jan 21, 75 
5000.26 

(12) Program thresholds in the DCP are appropriate, well- 
defined, and provide the flexibility for accomplishing 
tradeoffs while ensuring timely identification of signifi- 
cant problems. 

(13) Practical tradeoffs have been made between performance, 
risks, cost and schedule. 

(14) The acquisition strategy including type of contract is con- 
sistent with program characteristics and risk.* 

(15) Possible alternative fall -back position(s) are available 
in the event the proposed approach to the program is 
unsuccessful. 

(16) Design -to-cost goals, related reliability and maintain- 
ability goals, and associated thresholds are established. 

(17) Requisites for transition to full-scale engineering develop- 
ment have been established. 

(18) The program plan for this phase is adequate. 

b. DSARC I reviews are generally conducted to consider the readi- 
ness to proceed with the Program Initiation (Validation Phase). 
Additional DSARC I type reviews may be required to consider 
major changes in the need/threat, available technology or budg- 
et requirements that may take place during the Validation Phase. 

2. The DSARC II Review (Full -Scale Engineering Development) 

a. At the DSARC II review leading to the full-scale engineering de- 
velopment decision the following will be determined: 

(1) The Defense system still satisfies the military need and the 
requirements properly relate to the mission, the threat, 
and anticipated resources - -considering changes that have 
occurred since the previous Secretary of Defense decision. 

(2) System tradeoffs have produced a proper balance between 
cost, schedule and performance, including reliability and 
maintainability. 

(3) Quantity, resource, and schedule estimates are realistic 
and acceptable. Relative cost estimates of support and 
operations have been evaluated (e.g., 10-year cost). Cost 
estimates for both acquisition and support have been 
validated by independent assessment (DoD Directive 5000.4, 
reference (d)). 

(4) Major uncertainties and risks have been reduced to accept- 
able levels and effective methods are identified to resolve 
residual uncertainties and risks. 

(5) The proposed system is cost-effective compared with com- 
peting alternative ways of satisfying the military need, 



a47 



(6) Valid design-to-cost goals are established. 

(7) Program thresholds in the DCP are appropriate and well 
defined. 

(8) The approach for selection of major subsystems has been 
clearly identified and the program has considered the use 
of currently available subsystems versus new development 
(including test and support equipment). 

(9) The development and operational test and evaluation al- 
ready conducted has progressed satisfactorily, and the 
future test program proposed (e.g., objectives, plans and 
schedules) is sound (DoD Directive 5000.3, reference (c)). 

(10) An integrated test and evaluation plan has been prepared 
which identifies and integrates the effort and schedules 
of all TuE to be accomplished and ensures that all 
necessary T&E is accomplished prior to the decision points 
(DoD Directive 5000.3, reference (c)). 

(11) The program management structure and plan are sound. 

(12) Maximum practical use of competition has been incorporated 
in the acquisition plan. 

(13) The acquisition strategy including contract type is con- 
sistent with program characteristics and risk. 

(14) The proposed fall-back position(s), if any, has been 
reassessed and found suitable. 

(15) Requisites for the production/deployment decision, in- 
cluding logistics support, have been established. 

b. DSARC II reviews are generally conducted to consider major 

decisions for initiation of full-scale engineering development. 
Additional reviews may focus on procurement of additional 
development models to continue testing, or reorientation of the 
development program. 

3. The DSARC III Review (Production/Deployment) 

a. At the DSARC III review leading to the production/deployment 
decision, the following shall be determined: 

(1) The defense system still satisfies a military need and its 
performance properly relates to the mission, the threat, 
planning and policy guidance, and anticipated resources- 
considering changes that have occurred since the previous 
Secretary of Defense decision. 



a48 



Jan 21, 75 
5000.26 



(2) Test«results, based on development test and initial operational 
test and evaluation (IOT&E), are adequate to support a decision 
to proceed with major production, and plans and schedules for 
remaining testing are adequate as provided in DoD Directive 
5000.3 (reference (c)). 

(3) Quantity, resource and schedule estimates are still realistic 
and acceptable. Relative cost estimates of support and 
operation have been evaluated (e.g., 10 year cost) where 
relevant. The cost estimates for both acquisition and support 
have been validated by independent assessment (DoD Directive 
5000.4, reference (d)). 

(4) The defense system is cost-effective for both acquisition and 
support compared with competing alternative ways of satisfying 
the mil ita ry need. 

(5) System tradeoffs have produced a proper balance between cost, 
schedule and performance, including reliability and maintain- 
ability. 

(6) Program thresholds in the DCP are well defined. 

(7) Production quantity requirements are valid. 

(8) Issues concerning production, logistic support, facilities and 
maintenance are identified and plans for their resolution are 
sound. 

(9) The program management structure and plan are sound. 

(10) All major problems have been revealed and solutions to 
residual risks have been identified. 

(11) The acquisition strategy and contract plan are consistent with 
program characteristics and risks and the approach to con- 
tractor selection is sound. The proposed contract type and 
options, if any, provide DoD flexibility for increasing or 
decreasing the production rate and total quantity. 

(12) Requisites for future production decisions have been defined 
and competition (e.g., second source and/or breakout) has been 
considered. 

(13) The plan for transition to production and deployment is 
adequate including integration with existing operational 
systems. 

DSARC III reviews are conducted, in general, to consider production/ 
deployment decisions. Additional reviews may focus on such 



a49 



decisions as release of funds for long lead items, 
release of pilot or limited production, a limited buy 
or full production. 

4. Ship Programs , normally, for ship programs, the DSARC I and II 
reviews will occur prior to start of Preliminary Design and 
Contract Design, respectively. A DSARC III review will be con- 
ducted "prior to start of Detailed Design (for the first pro- 
curement-funded ship). Upon satisfactory progress of the test 
and evaluation related to the ship class an additional DSARC III 
review will be conducted prior to approval to procure Fellow- 
ships (DoD Directive 5D00.3, reference (c)). 

D. Special meetings of the DSARC may be reguired to address special 
problems that arise in the acguisition of a defense system program 
that may reguire a Secretary of Defense decision. These meetings 
may be reguested by the Head of the cognizant DoD Component or by 
one of the DSARC Principals to review the issues to be resolved and 
to prepare appropriate recommendations as to the course of action 
for consideration and approval by the Secretary of Defense. 

1. When there is a breach of DCP threshold, or a threatenei breach, 
the Head of the DoD Component concerned shall notify the DSARC 
Chairman informally and follow this notification by formal 
memorandum indicating the circumstances, the seriousness of the 
breach and alternative courses of action open to the Secretary 
of Defense. The DSARC Chairman will evaluate the situation to 
determine whether or not the DSARC will meet to develop a set 

of recommendations to the Secretary of Defense, '.'here the 
situation can be resolved easily, a DSARC review is not needed; 
the DSARC Chairman shall prepare a memorandum to the Secretary 
of Defense, with a proposed action memorandum for Secretary of 
Defense signature; he shall coordinate the position with the 
DSARC Principals and the Deputy DDR&E (T&E), prior to submis- 
sion to Secretary of Defense. (Same procedure as subsection 
VII. E. ) 

2. The DSARC may also meet to consider the adeguacy of the current 
system acguisition policies or the desirability of new or 
revised policies. 

E. The Chairman of the DSARC may reguest an Executive Session of the 
DSARC Principals to develop a set of recommendations that can be 
forwarded to the Secretary of Defense. The Chairman may invite 
other key participants in the DSARC review to attend this Executive 
Session. 

F. The following prereguisites to DSARC reviews are reguired in the 
time frame indicated below or as far in advance as possible in the 
case of a special meeting of the DSARC. 



a50 



Jan 21, 75 
5000.26 " 

V. The "for coordination" draft DCP - 10 days prior to the 
scheduled date of the DSARC review. 

2. The Deputy DDR&E (TftE) report of the test program (DoD 
Directive 5000.3, reference (c)) - 2 days prior to the 
scheduled date of the DSARC review. 

3. The Chairman Cost Analysis Improvement Group (CAIG) 
report on the evaluation of the Military Service cost 
estimates (DoD Directive 5000.4, reference (d)) - 5 days 
prior to the scheduled date of the DSARC review. 

VII. RESPONSIBILITIES 

A. The Head of the coqnizant DoD Component shall submit to the 
staff of the appropriate DSARC Chairman an "initial draft" 
or a new updated draft DCP in sufficient time, normally a 60 
day lead time, to ensure the availability of a "for coordi- 
nation" draft DCP at least 10 workinq days prior to the DSARC 
review. 

B. The following are responsible for assurinq availability of 
the information specified in subsection VI. F. to the DSARC 
Principals during the 10 working days prior to the scheduled 
DSARC meeting, or as far in advance as possible for a special 
DSARC review: 

1. The staff of the DSARC Chairman - the "for coordination" 
draft DCP. 

2. The Deputy DDR&E (T&E) - his test and evaluation report. 

3. The Chairman Cost Analysis Improvement Group (CAIG) - 
the CAIG evaluation of the Service cost estimates. 

C. The DSARC principals, after review of the "for coordination" 
draft, may submit their comments on the issues to be 
resolved at the meeting to the Head of the cognizant DoD 
Component and to the DSARC Chairman. 

D. The DSARC Executive Secretary, appointed by the DSARC 
Chairman, shall be responsible for administration of the 
DSARC. He shall schedule and announce each meetinq, orovide 
the agenda for all participants, and record the proceedings. 
He shall collaborate with the appropriate DS^RC Chairman's 
staff office in the preparation and coordination of the 
DSARC recommendations and action memoranda. 



a51 



E. The DSARC Chairman will provide to the Secretary of Defense 
within 15 working days following the DSARC review (1) a clear 
and objective statement of all issues, and the recommenda- 
tions of the DSARC; and (2) a proposed action memorandum for 
Secretary of Defense signature, reflecting the DSARC recom- 
mendations. Such report will be drafted by the DSARC Chair- 
man and be coordinated with the other DSARC principals and 
the Deputy DDR&E (TSE), it shall include any dissenting 
views. A copy of the draft report will be provided to the 
Head of the cognizant DoD Component for information and comment 
prior to forwarding to the Secretary of Defense. 

F. The DSARC Chairman will assure that the Secretary of Defense 
decision is promulgated in a revised approved DCP within 30 
working days after the Secretary of Defense decision is made. 



VIII. WAIVERS 



Specific program circumstances may dictate the need for DoD 
Components to deviate from the procedures outlined herein. 
When appropriate, the Mead of the cognizant DoD Component 
will request waiver to particular requirements of this document 
from the appropriate DSARC Chairman, indicating the circum- 
stances that justify such waiver. 

IX. EFFECTIVE DATE AND IMPLEMENTATION 



This Directive is effective immediately. The DoD Components 
which have authority and responsibilities under DoD Directive 
5000.1 (reference (a)) shall transmit this Directive to all 
organizations and personnel involved in major defense system 
acquisition programs. No implementing, policy documents 
necessary. \A_ O 

Deputy Secretary of Defe: 




10 




a52 



APPENDIX 11 



December 22, 1975 
NUMBER 5000.1 



DDR&E 



Department of Defense Directive 



SUBJECT Acquisition of Major Defense Systems 

Reference: (a) DoD Directive 5000.1, "subject as 
above," July 13, 1971 (hereby 
cancelled) 

I. REISSUANCE AND PURPOSE 

This Directive reissues reference (a) which 
establishes policy for major Defense system 
acquisition in the Military Departments and 
Defense Agencies (referred to as "DoD 
Components"). Reference (a) is hereby 
superseded and cancelled. 

II. APPLICABILITY 

The provisions of this Directive apply to 
major programs, so designated by the Secretary 
of Defense/Deputy Secretary of Defense 
(referred to as "SecDef"). This designation 
shall consider (a) dollar value (programs 
which have an estimated RDT&E cost in excess 
of 50 million dollars, or an estimated pro- 
duction cost in excess of 200 million dollars, 
all in FY 72 dollars) ; (b) national urgency; 
and (c) recommendations by DoD Component Heads 
or Office of Secretary of Defense (OSD) 
officials. In addition, the management 
principles in this Directive are applicable 
to all programs. 



III. POLICY 



Mode of Operation . Successful development, 
production and deployment of major Defense 
systems are primarily dependent upon compe- 
tent people, rational priorities and clearly 
defined responsibilities. Responsibility and 
authority for the acquisition of major 



a53 



Defense systems shall be decentralized to the maximum 
practicable extent consistent with the urgency and 
importance of each program. The development and 
production of a major Defense system shall be managed 
by a single individual (program manager) who shall 
have a charter which provides sufficient authority 
to accomplish recognized program objectives. Layers 
of authority between the program manager and his 
Component Head shall be minimum. For programs involving 
two or more Components, the Component having dominant 
interest shall designate the program manager, and his 
charter shall be approved by the cognizant official 
within OSD. The assignment and tenure of program 
managers shall be a matter of concern to DoD Component 
Heads and shall reflect career incentives designed to 
attract, retain, and reward competent personnel. 

1. The DoD Components are responsible for identifying 
needs and defining, developing and producing 
systems to satisfy those needs. Component Heads 
are also responsible for contractor source selection 
unless otherwise specified by the SecDef on a 
specific program. 

2. The C^D is responsible for (a) establishing 
acquisition policy, (b) assuring that major Defense 
system programs are pursued in response to valid 
needs, and (c) evaluating policy implementation 

on each approved program. 

3. The OSD and DoD Components are responsible for 
program monitoring, but will place minimum demands 
for formal reporting on the program manager. Non- 
recurring needs for information will be kept to 

a minimum and handled informally. 

4. The SecDef will make the decisions which initiate 
program commitments or increase those commitments. 
He may redirect a program because of an actual 

or threatened breach of a program threshold in an 
approved Decision Coordinating Paper (DCP) . The 
DCP and the Defense Systems Acquisition Review 
Council (DSARC) will support the SecDef decision- 
making. These decisions will be reflected in the 
next submission of the Program Objective 
Memorandum (POM) by the DoD Component. 

B. Conduct of Program . Because every program is differ- 
ent, successful program conduct requires that sound 
judgment be applied in using the management principles 
of this Directive. Underlying specific Defense system 
developments is the need for a strong and usable 



a54 



Dec 22, 75 
5000.1 



technology base. This base will be maintained by 
conducting research and advanced technology effort 
independent^ of specific Defense systems development. 
Advanced technology effort includes prototyping, 
preferably using small, efficient design teams and a 
minimum amount of documentation. The objective is 
to obtain significant advances in technology at minimum 
cost. 

1 . Program Initiation 

a. Early conceptual effort is normally conducted 
at the discretion of the DoD Component until 
such time as the DoD Component determines that 

a major Defense system program should be pursued. 
It is crucial that the right decisions be made 
during this conceptual effort; wrong decisions 
create problems not easily overcome later in the 
program. Therefore, each DoD Component will 
designate a single individual, such as the 
Assistant Secretary for Research and Development, 
to be responsible for conceptual efforts on new 
major programs. 

b. The considerations which support the determination 
of the need for a system program, together with 

a plan for that program, will be documented in 
the DCP. The DCP will define program issues, 
including special logistics problems, program 
objectives, potential benefits in context with 
overall DoD strategy and fiscal guidance, program 
plans, performance parameters, areas of major 
risk, system alternatives and acquisition 
strategy. The DCP will be prepared by the DoD 
Component, following an agreement between OSD 
and that Component on a DCP outline. The Chairman 
of the DSARC has the basic responsibility for 
coordination of inputs for the DCP and its sub- 
mittal to the DSARC for consideration and to the 
SecDef for subsequent decision. If approved, 
the program will be conducted within the DCP 
thresholds . 

2. Full-Scale Engineering Development . When the DoD 
Component is sufficiently confident that program worth 
and readiness warrant commitment of resources to full- 
scale engineering development, it will request a 
SecDef decision to proceed. At that time, the DCP 
will be updated and the DSARC will normally review 
program progress and suitability to enter this phase 
and will forward its recommendations to the SecDef 

for final decision. Such review will confirm (a) the 



a55 



need for the selected Defense system in consider- 
ation of threat, system alternatives, special 
logistics needs, estimates of development costs, 
preliminary estimates of life cycle costs and 
potential benefits in context with overall DoD 
strategy and fiscal guidance; (b) that development 
risks have been identified and solutions are in 
hand; and (c) realism of the plan for full-scale 
engineering development. 

3. Production/Deployment . When the DoD Component is 
sufficiently confident that engineering is complete 
and that commitment of substantial resources to 
production and deployment is warranted, it will 
request a SecDef decision to proceed. At that time, 
the DCP will, be updated and the DSARC will again 
review program progress and suitability to enter 
substantial production/deployment and forward its 
recommendations to the SecDef for final decision. 
Such review will confirm (a) the need for producing 
the Defense system in consideration of threat, 
estimated acquisition and ownership costs and 
potential benefits in context with overall DoD 
strategy and fiscal guidance; (b) that a practical 
engineering design, with adequate consideration 
of production and logistics problems is complete; 
(c) that all previously identified technical 
uncertainties have been resolved and that operation- 
al suitability has been determined by test and 
evaluation; and (d) the realism of the plan for the 
remainder of the program. Some production funding 
for long lead material or production planning 
effort may be required prior to the production 
decision. In such cases, the SecDef will decide 
whether a DSARC review and revised DCP are requir- 
ed. In any event, full production go-ahead will 
be authorized by approval of the DCP. 

C. Program Considerations 

1. System need shall be clearly stated in operational 
terms, with appropriate limits, and shall be chal- 
lenged throughout the acquisition process. State- 
ments of need/performance requirements shall be 
matched where possible with existing technology. 
Wherever feasible, operational needs shall be 
satisfied through use of existing military or 
commercial hardware. When need can be satisfied 
only through new development, the equivalent needs 
of the other DoD Components shall be considered 
to guard against unnecessary proliferation. 



a56 



D-c 22, 75 
5000.1 



2. Cost parameters shall be established which consider 
the cost of acquisition and ownership; discrete cost 
elements (e.g, unit production cost, operating and 
support cost) shall be translated into "design to" 
requirements. System development shall be continu- 
ously evaluated against these requirements with the 
same rigor as that applied to technical requirements. 
Practical tradeoffs shall be made between system 
capability, cost and schedule. Traceability of 
estimates and costing factors, including those for 
economic escalation, shall be maintained. 

3. Logistic support shall also be considered as a 
principal design parameter with the magnitude, scope 
and level of this effort in keeping with the program 
phase. Early development effort will consider only 
those parameters that are truly necessary to basic 
Defense system design, e.g., those logistic problems 
that have significant impact on system readiness, 
capability or cost. Premature introduction of 
detailed operational support considerations is to 

be avoided. 

4. Programs shall be structured and resources allocated 
to ensure that the demonstration of actual achieve- 
ment of program objectives is the pacing function. 
Meaningful relationships between need, urgency, risk 
and worth shall be thereby established. Schedules 
shall be subject to trade-off as much as any other 
program constraint. Schedules and funding profiles 
shall be structured to accommodate unforeseen problems 
and permit task accomplishment without unnecessary 
overlapping or concurrency. 

5. Technical uncertainty shall be continually assessed. 
Progressive commitments of resources which incur 
program risk will be made only when confidence in 
program outcome is sufficiently high to warrant 
going ahead. Models, mock-ups and system hardware 
will be used to the greatest possible extent to 
increase confidence level. 

6. Test and evaluation shall commence as early as 
possible. A determination of operational suitability, 
including logistic support requirements, will be 
made prior to large-scale production commitments, 
making use of the most realistic test environment 
possible and the best representation of the future 
operational system available. The results of this 
operational testing will be evaluated and presented 

to the DSARC at the time of the production decision. 



a57 



7. Contract type shall be consistent with all program 

characteristics including risk to the contractor and the 
government. Normally, the precise production cost of a 
new complex Defense system cannot be determined prior 
to development and this creates a situation of risk 
such that: 

a. The total package procurement concept will not be 
used. 

b. Firm or ceiling priced production options shall not 
be used in development contracts. However, when 
development of major systems has proceeded to a 
point that technical and performance uncertainties 
have been minimized and realistic estimates of 
their cost identified, firm or ceiling priced 
production options for limited quantities may be 
included in the development contract. Such options 
may be appropriate, for instance, when prototyping 
or other forms of technical and cost verification 
of concepts has occurred. 

c. Cost type prime and subcontracts are preferred 
where substantial development effort is involved. 

d. When risk is reduced to the extent that realistic 
pricing can occur, fixed price type contracts should 
be issued. 

e. Letter contracts shall be minimized. 

f. Changes shall be limited to those that are necessary 
or offer significant benefit to the DoD. When 
change orders are necessary, they shall be contrac- 
tually priced or subject to an established ceiling 
before authorization, except where this is impractical, 

3. The source selection decision shall take into account 

the contractor's capability to develop a necessary Defense 
system on a timely and cost-effective basis. The DoD 
Component shall have the option of deciding whether or 
not the contract will be completely negotiated before a 
program decision is made. Solicitation documents shall 
require contractor identification of uncertainties and 
specific proposals for their resolution. Solicitation 
and evaluation of proposals should be planned to minimize 
contractor expense. Proposals for cost-type or incentive 
contracts may be penalized during evaluation to the 
degree that the proposed cost is unrealistically low. 



a58 



Dec 22, 75 
5000.1 

9. Management information /program control requirements 
shall provide information which is essential to effective 
management control. Such information should be gener- 
ated from data actually utilized by contractor operating 
personnel and provided in summarized form for succes- 
sively higher level management and monitoring require- 
ments. A single, realistic work breakdown structure 
(WBS) shall be developed for each program to provide a 
consistent framework for (a) planning and assignment of 
responsibilities, (b) control and reporting of progress, 
and (c) establishing a data base for estimating the future 
cost of Defense systems. Contractor management 
information/program control systems, and reports ema- 
nating therefrom, shall be utilized to the maximum ex- 
tent practicable. Government-imposed changes to 
contractor systems shall consist of only those necessary 
to satisfy established DoD-wide standards. Documenta- 
tion shall be generated in the minimum amount to satisfy 
necessary and specific management needs. 

IV. EFFECTIVE DATE AND IMPLEMENTATION 

A. This Directive is effective immediately. Two copies of 
implementing regulations shall be forwarded to the Secre- 
tary of Defense within 90 days. 

B. The number of implementing documents shall be minimized 
and necessary procedural guidance consolidated to the 
greatest extent possible. Selected subjects to be covered by 
DoD Directives /Instructions or Joint Service/Agency docu- 
ments in support of this Directive are listed in enclosure 1. 
Each DoD Component shall forward the Joint Service/ Agency 
documents for which it is responsible to the Secretary of 
Defense for approval prior to issuance. 



JV-V, to*~ 



Deputy Secretary of Defens 




Enclosure - 1 

Related Policy 



a59 



5000.1 (Encl 1) 
Dec 22, 75 



RELATED POLICY 



Responsibility for the following policy documents is assign- 
ed to the Cognizant Office indicated. In each case, the 
Cognizant Office shall (a) generate the policy, or (b) 
delegate authority to a lead DoD Component for preparation 
and subsequent issue of a joint Service/Agency regulation, 
agreement or guide after approval by OSD. 



Cognizant 

Policy Subject Office 

Cost Analysis Improvement ASD(PASE) 

Group 

Cost/Schedule Control Systems ASD(C) 

Design to Cost DDR&E 

Data, Acquisition of ASD(I&L) 



The DCP and the DSARC Process DDR&E 

DSARC Charter DDR&E 

Industrial Preparedness ASD(I&L) 

Production Planning 

Procedures 

Industrial Preparedness ASD(I&L) 

Planning Manual 

Logistic Support ASD(I&L) 

Management Careers, Systems ASD(PA&E) 

Acquisition 

Management Systems Control ASD(C) 

Manufacturing Technology ASD(I&L) 

Priorities and Allocations ASD(I&L) 

Quality Assurance ASD(I&L) 

Standardization ASD(I&L) 

Test and Evaluation DDR&E 

Value Engineering ASD(I&L) 

Proposal Evaluation and Source ASD(I&L)/ 

Selection DDR&E 



Document 

DoD Directive 

5000.4 
DoD Instruction 

7000.2 
DoD Directive 

5000.28 
DoD Instruction 

5010.12 
DoD Instruction 

5010.29 
DoD Instruction 

5000.2 
DoD Directive 

5000.26 
DoD Instruction 

4005.3 

DoD 4005. 3M 

DoD Directive 

4100.35 
DoD Directive 

5000.23 
DoD Instruction 

7000.6 
DoD Instruction 

4200.15 
DoD Instruction 

4400.1 
DoD Directive 

4155.1 
DoD Directive 

4120.3 
DoD Directive 

5000.3 
DoD Instruction 

5010.8 
DoD Directive 

4105.62 




a60 



APPENDIX 12 

THE DEPUTY SECRETARY OF DEFENSE 

WASHINGTON. C. 20301 

MAY 1 7 1976 

MEMORANDUM FOR DIRECTOR, DEFENSE RESEARCH AND ENGINEERING 

SUBJECT: Designation as DoD Acquisition Executive 

Ref (a): Office of Federal Procurement Policy, OMB, Circular A , 

subject: Major Systems Acquisitions 

(b): My Memo of 23 January 1976, subject: AAG Report of 30 September 
1975 to the DepSecDef; Appraisal and Actions Concerning 

On 5 March, the OMB formally submitted reference (a) to the Congress. 
The Congress has 30 days to voice objection or request modifications. I 
believe it is unlikely that Congress will take any action and that the 
Circular will become official policy guidance for the executive branch in 
matters concerning the acquisition of major systems on or about 5 April. 

To insure the readiness of DoD to respond to the provisions of the 
Circular-and to facilitate other OSD organizational chances, I hereby 
desicnate you as the DoD Acquisition Executive. Paragraph 8 of the O.MB 
Circular outlines the policy guidelines for structuring the management of 
major systems acquisition. As discussed in our meeting of 25 February, I 
believe it is mandatory that we move forward with those actions I have 
directed in reference (b), that we plan additional actions that could take 
place in consonance with structuring .the front-end of the acquisition 
process, and that we initiate such other actions necessary to the imple- 
mentation of the policies contained in the OMB Circular. 

Consistent with this direction, I request that you prepare a draft 
DoD Directive which outlines the role and responsibility of DoD's Acquisi- 
tion Executive. In this connection I desire that the Acquisition Executive 
be designated as the single Chairman of the DSARC and that it be clearly 
understood that the icur Key decisions (paragraph 9> reference (a)) in the 
systems acquisition process will be made by the SecD^f/DepSecDeJ'. 




Attachment - 

OMB Circular No. A- Sub j : Major System Acquisitions 







/6-tai* 






a61 



APPENDIX 13 



THE DEPUTY SECRETARY OF DEFENSE 

WASHINGTON. D. C. 30301 



MAY 1 7 1976 



MEMORANDUM FOR DIRECTOR OF DEFENSE RESEARCH 
AND ENGINEERING 

SUBJECT: Defense Systems Acquisition Process 



I approve the basic plan to structure the front end of the systems 
acquisition process proposed by your 17 March 1976 memo. There 
are, hoyever, certain items I request be given further attention and 
emphasis in the implementation. 

a. OMB Circular A-109 requires that each Agency establish an 
Acquisition Executive to focus on systems actions within the Agency. 
Such a position will be established in the DoD and is to be incorporated 
in this plan. 

b. An increased role is needed for the JCS in advising the SecDef 
on mission needs and in the JCS participation in the systems acquisition 
process. 

c. Major emphasis is required in the matter of forming acauisition 
strategies and in the preparation of program business plans. 

ft-.?. ' 




O 



UNIVERSITY OF FLORIDA 

11111111 

3 1262 09112 4858